In the evolving landscape of international taxation, transfer pricing remains a cornerstone of compliance for multinational enterprises. At the heart of this discipline lies the use of comparability analyses - benchmarking studies that assess whether intra-group transactions are conducted at arm’s length, by comparing them to similar transactions between independent entities.
In recent years, Greek tax authorities have shown a growing preference for benchmarking studies that rely exclusively on data from the Greek market. This trend is particularly evident in cases where the tested intra-group activity and the associated value chain are based in Greece, such as Limited Risk Distributors (LRDs), contract manufacturing, or services’ provision.
The rationale behind this approach is clear: the Greek market has its own economic, regulatory, and operational characteristics and using Greek comparables is seen as a way to more accurately reflect the local business environment. Factors such as local cost structures, consumer behavior, and market risks are often cited as justification for narrowing the geographic scope of comparability.
However, this approach raises important questions about its alignment with broader European and OECD standards, not to mention the letter of the Greek TP regulations itself. Within the European Union, companies operate in a largely integrated economic space, where cross-border comparability is both common and often necessary. The use of pan-European comparables has long been accepted as a practical and reliable approach, especially where functional similarities outweigh geographic differences.
The OECD Transfer Pricing Guidelines, which serve as the global reference point for most jurisdictions, including Greece, do not prescribe a strict geographic limitation. Paragraph 1.130 of the Guidelines highlights that geographic location is one of the several comparability factors, but not necessarily the decisive one. Functional comparability, data reliability and economic conditions typically take precedence - particularly when reliable local comparables are scarce or not sufficiently reliable.
At the same time, and to make things even more complex, Greek TP regulations do not explicitly define the geographic region to be covered by a benchmarking, hence leaving, in principle, room for taxpayers and TP practitioners alike to decide on this (and although standard market practice is to perform and rely on the results of European benchmarkings).
Balancing local expectations and international consistency
This creates a dual challenge for multinational groups operating in Greece: on one hand, they must meet the increasingly specific expectations of the Greek tax authorities, even if this does not come from the letter of the law; while on the other, they must maintain consistency with group-wide transfer pricing policies and ensure defensibility across jurisdictions. This tension often translates into a practical need for dual-layered documentation – with the Local File reflecting Greek comparables, and the Master File maintaining a broader, EU-wide benchmark set aligned with group policy.
Practical implications for Businesses
In some sectors, the pool of Greek comparables remains limited, especially for specialized or capital-intensive activities. This scarcity can create challenges in identifying reliable comparables and may increase the risk of disputes or adjustments during tax audits. In such cases, companies may need to invest additional resources in justifying the use of broader geographic sets or in documenting the lack of suitable local comparables.
A policy question beyond compliance
The issue is not merely technical - it reflects a broader policy question about Greece’s position within the European transfer pricing landscape. As Greece continues to attract foreign investment and position itself as a regional hub for specialized functions, maintaining alignment with OECD standards will be key to ensuring both tax certainty and investor confidence.
A balanced, evidence-based approach to comparability - one that recognizes local market characteristics while remaining consistent with international principles - will strengthen Greece’s credibility and competitiveness.
Preparing for the next phase
For now, companies operating in Greece would be well advised to:
Monitor evolving audit practices,
Align their benchmarking strategies with both local and group expectations, and
Invest in robust, transparent documentation that clearly articulates the rationale for any geographic scope decisions.
At the end of the day, the goal is not having to choose between Greek and European comparables, but to integrate both in a meaningful way, and by ensuring that transfer pricing policies remain defensible, practical, and aligned with Greece’s evolving regulatory and economic environment.
*Article by Fotios Bentevis, Senior Manager, PwC Greece
