Understanding Transfer Pricing Dynamics: Evidence from Related Party Transactions in EU Public Companies
Understanding Transfer Pricing Dynamics: Evidence from Related Party Transactions in EU Public Companies

Author(s): Renata Fulop
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Transfer pricing; Related party transactions; Multiple linear regression; Influencing factors; EU context
Summary/Abstract: This research explores the determinants influencing transfer pricing practices within the EU business landscape, driven by rising related party transactions leading to significant fiscal scandals involving companies like McDonald’s France, BlackRock, and Maersk Oil and Gas in 2022. After an investigation into its transfer pricing arrangements, the US fast-food company agreed to pay €1.25 billion to the French tax authority. All these cases underscore the gravity of the issue. Data was manually collected from annual reports and databases like Thomsons Reuters and Bloomberg, focusing on companies across seven EU countries: France, Germany, Poland, Ireland, Hungary, the Netherlands, and Romania. Using multiple linear regression models, the study analyzes independent variables such as company size, leverage ratio, profitability, market to book ratio, controlling shareholders, and corporate income tax rate. The study aims to provide valuable insights into the factors shaping the concept, emphasizing the need for greater transparency, accountability, and trust in financial operations within the EU framework.

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