Transfer pricing

Attribution of Profits to a Permanent Establishment – Release of Discussion Draft of Part IV (Insurance).


Further to the posting on 27 January 2005 the CFA has now released for public comment a discussion draft of the 4th and final part of its Report on the Attribution of Profits to a Permanent Establishment. Part I of the Repoert deals with general considerations, Part II deals with traditional banking, Part III deals with global trading and Part IV deals with insurance.

Once finalised, the conclusions of Parts I-IV of the Report will be implemented through revision of the Commentary on Article 7 and/or the Article itself. Further practical guidance will be produced in the form of background Reports and/or Chapter(s) of the OECD Transfer Pricing Guidelines. The projected completion date for the project –which entails both refinement and finalisation of the Report itself and revision of the Commentary on Article 7 and/or the language of the Article itself - is no later than January 2007.

Parts I-III of the Report have already been the subject of extensive public consultation, but this is the first time that business have had an opportunity to comment on issues specific to the insurance industry. The kind of issues on which business input is sought are the impact of regulation on the conduct of insurance business, the commercial rational for internal reinsurance within a single enterprise and how to determine the amount of surplus to be attributed to the parts of the enterprise which bear risk. More details are contained within the Discussion Draft.

Comments should be submitted to no later than 16 September 2005. Depending on the nature of comments received a decision will be taken on whether it would be useful to have a face to face meeting with commentators.

If you have any questions concerning the Discussion Draft please contact Jeffrey Owens at (+33-1) 45 24 91 08.

If you encounter practical difficulties, for example in downloading the Discussion Draft please contact  Alexandra Wijmenga-Daniel by email on  or telephone  (+33-1) 45 24 95 33.