Does arbitration on transfer price cass have a future?

When the raising of a ceiling by a tax department creates a dual tax situation, the application of tax agreements should lead to this being eliminated.
In reality though, things are more complex, especially in the field of transfer prices. OECD has developed a body of doctrine on the subject, embodied by its guidelines, whose very existence is an integral part of the tax agreement model.
These elements, in the context of major intra-group transactions, have generated steady activity on the part of tax departments with regard to transfer prices. A highly significant rise in the number of cases of dual taxation within groups has followed, with increased recourse to amicable settlements.
Yet in 2003, the OECD published a report concerning shortcomings in the application of this procedure, generating a series of projects intended to improve its implementation by Governments and to suggest alternative ways of settling these cases.
That same year, the EU (European Forum on transfer prices) also began reflecting on the reputedly laboured nature of the European Arbitration Agreement of 26th July 1990, anticipating a procedure of elimination of dual taxation with regard to transfer prices, made up of an amicable procedure between Governments and a consultative arbitration commission.
Until very recently, it has to be said that arbitration in the field of transfer prices was anecdotal in character. In France, only a few agreements included an arbitration clause, according to modalities that were never made clear (1994 tax agreements with the United States or with Canada in 1995). For its part, the arbitration procedures laid down in the European arbitration agreement were not often envisaged by companies.
Today, there is a clear increase in interest for arbitration for settling cases of dual taxation to which Governments have not been able to find a solution. Most Governments have begun, at least in principle, to be less hostile towards this in an area which is nevertheless a highly sovereign matter.
For example, in 2003 and 2005 France set up an arbitration commission with Italy
and then Germany within the framework of the European arbitration agreement, to deal with unresolved cases of dual taxation.
The process was accelerated in 2008 by the OECD with the integration into the updated model agreement of an arbitration clause appended to the amicable procedure. This clause has been taken up and integrated into the negotiation policy of tax agreements by major players such as the USA. For France, it figures in the new tax agreement with the United Kingdom (2008) and the amendment to the tax agreement with the USA (2209). Arbitration constitutes an important means of pressure between Governments and for companies so that government departments can find solutions that will eliminate the cases of dual taxation they have contributed to creating.