OECD draft on intra-group services: Revolution or Evolution?

Public consultation document on proposed revisions to Chapter VII of the OECD TP Guidelines.
It is still a draft, but the direction is clear: benefits received from intra-group services shall be documented with more granularity.

What is being updated?

Working Party N6 (‘WP6’) is modernising Chapter VII on intra-group services:

The draft covers the benefit test, pricing methods, cost allocation, documentation and low value-adding services.
The OECD says general principles are not intended to change, but practical expectations are becoming clearer.
It is still a consultation draft, not final consensus guidance.
The objective is to align Chapter VII with Chapters I-III by emphasising accurate delineation, the benefit test and arm’s length pricing.

Labels are not enough

Service fee labels, invoices and agreements will not carry the analysis on their own:

A management fee or signed agreement is not proof that a service was rendered.
The actual conduct, activities performed and commercial context must support the charge.
Absence of a written agreement or payment does not automatically mean no service exists.
The question becomes: who performed the activity, for whose benefit, and why would an independent party have been willing to pay for it?

Benefit test: more precise

The benefit test is clarified and becomes more recipient-specific:

A benefit exists where an independent enterprise would reasonably be willing to pay for the activity or perform it itself.
A failed project or loss-making year does not automatically deny the service.
The benefit test and the arm's length remuneration are separate analyses.
Where costs are allocated to several entities, the expected benefit should be demonstrated for each recipient.

LVAS stays simple, but not universal

The simplified low value-adding services (‘LVAS’) approach largely remains, but its limits matter:

The 5% mark-up remains linked to qualifying low value-adding services.
It should not be used as a benchmark or safe harbour for all service charges.
Core business, unique intangibles and significant risks require separate analysis.
Complex service arrangements should not be forced into the LVAS box.

Pricing requires more judgement

The draft moves pricing away from automatic cost-plus thinking:

There is no presumption that cost plus or TNMM is always the right method.
There is no presumption that the service provider should automatically be selected as the tested party.
Routine support may remain cost-based, while intangible-rich or highly integrated services may need another method, such as transactional profit split method.
Pass-through costs should not be marked up where the provider adds no value.

What should taxpayers do now?

The draft wording may evolve after comments, but the next steps for taxpayers are clear:

Identify which services are actually provided, by whom, to whom, and why each recipient is expected to benefit.
Review existing agreements and ensure they accurately reflect the actual conduct of the parties.
Keep contemporaneous evidence that services were performed, not only agreements and invoices.
Review cost pools, allocation keys, mark-ups and pass-through costs before charging them out.
Monitor the need to update old TP Policies regarding intra-group services.

Want to know more?

Contact our Transfer Pricing experts to assess the documentation and pricing implications for your intra-group service arrangements.

Source: OECD Public Consultation Document, Revisions to Chapter VII, 1 June - 22 July 2026