Global Tax Seminar Series – “The Definition and Application of the Separate Entity Approach in the OECD Transfer Pricing Guidelines”
The mission of the Global Tax Seminar Series (GTSS) is to provide a regular and convivial forum for the presentation and discussion of new academic tax law, policy, and theory research by colleagues from all continents. The seminars are run in person and online as a Zoom webinar, with 25—to 30-minute paper presentations followed by comments from a distinguished panel of discussants and then ample time for questions and discussion.
On Wednesday 11 November 2026, Jérôme Monsenego (Stockholm University) will present on the following topic: “The Definition and Application of the Separate Entity Approach in the OECD Transfer Pricing Guidelines”.
Abstract: The separate entity approach underpins the arm’s length principle in the OECD Transfer Pricing Guidelines. Despite that central role, the concept is nowhere clearly defined, and its application appears to move between transactional, entity-level and group-wide perspectives. That instability casts doubt on whether the approach can bear the theoretical weight placed upon it. This paper analyses how the separate entity approach is defined and applied in the Guidelines, with a view to clarifying its meaning, identifying departures from a strictly entity-based analysis, and asking what, if anything, justifies those departures.
Two conclusions follow. First, Article 9 of the OECD Model Tax Convention, on which the arm’s length principle rests, does not itself impose a legal requirement to tax group members strictly on a separate entity basis. Second, the Guidelines must accommodate complex group structures and intra-group arrangements that have no counterpart in dealings between unrelated parties, while remaining within the arm’s length principle. That tension explains the shifting perspectives adopted in the Guidelines and reflects the wider difficulty of applying a market-based standard in a non-market setting.
Discussants: Eduardo Baistrocchi (LSE), Ian Dykes (PwC UK), Vasiliki Koukoulioti (Queen Mary), John Vella (University of Oxford, TBC).
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For further information, please contact Eduardo Baistrocchi, Associate Professor of Law, at e.a.baistrocchi@lse.ac.uk.
This seminar is open to the public and will operate on a first-come, first-served basis.
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