Transfer pricing policy in the context of customs regulations, ESG, and the Green Deal – how to build it effectively?

In recent years, transfer pricing policy has evolved from a purely tax-focused document into a key component of broader compliance strategy. Regulatory changes – both at national and EU levels – now require transfer pricing (TP) policies to address not only tax regulations but also customs matters, environmental concerns, and corporate governance (ESG) considerations.

Why should you update your transfer pricing policy? How can it be aligned with the Green Deal and customs regulations?

Transfer pricing policy – more than just a tax obligation

A transfer pricing policy is an internal document that defines how prices are set for transactions between related parties. Its primary purpose is to ensure that intra-group prices comply with the arm’s length principle.

Until recently, the focus was mainly on tax compliance and avoiding penalties. Today, however, TP policies must serve a broader role by aligning with:

• customs documentation (especially for imports),
• non-financial reporting requirements (e.g., ESG/CSRD),
• the company’s sustainability strategy.

Transfer pricing and customs regulations – the hidden risk easily overlooked

Intra-group transactions often involve the movement of goods across customs territories. In such cases, the transaction price affects not only taxable income but also the customs value of the imported goods.

Customs value vs. transfer price – do they have to be the same?

Customs value is calculated based on different rules than transfer pricing. There is an autonomous system for determining customs value, based on principles established by the World Trade Organization (WTO), implemented within various customs jurisdictions. In this context, the definition of related parties under customs law and the application of the transaction value method (invoice price) for imports from related entities are particularly significant.

Therefore, if an importer bases customs value on prices determined using TP methods, or applies the invoice price for imports from non-EU related entities, they must consider independent customs regulations.

In practice, the correct calculation of customs value requires a different model than the one used under transfer pricing rules. Applying one set of regulations without regard to the other may lead to:

• disputes with customs and tax authorities,
• the need for customs and tax adjustments (e.g., double taxation),
• logistical delays and risk of administrative penalties.

Hence, alongside a TP policy, a customs analysis should be conducted to accurately determine how customs value is established for both customs and tax purposes (as customs value also impacts import VAT), taking into account adjustment and update mechanisms.

The Green Deal and ESG – a new dimension of responsibility in TP policy

The European Green Deal is an EU-wide strategy aimed at achieving climate neutrality by 2050. It is accompanied by a range of environmental, social, and corporate regulations, including:

• the Corporate Sustainability Reporting Directive (CSRD),
• European Sustainability Reporting Standards (ESRS),
• supply chain carbon footprint requirements.

How does this affect transfer pricing policy?

Companies will be required to disclose the environmental and social impact of their operations – including those related to TP. This entails:

• analysing the value chain in terms of CO₂ emissions, energy efficiency, and supplier locations,
• assessing the impact of related entities’ locations on sustainable development,
• integrating ESG criteria into procurement and intra-group transfer policies.

A well-structured TP policy can help not only to mitigate tax risks but also to demonstrate ESG compliance in reporting processes.

How to build an effective transfer pricing policy in 2025?

1. Start with a process and transaction map
   Identify all intra-group transactions – including goods, services, and financial flows. Also consider data transfers, know-how, intellectual property rights, etc.
2. Address customs and ESG risks
   Identify which transactions have customs relevance or may be sensitive in the ESG context. Create a list of “hot spots” – e.g., imports from environmentally high-risk countries or the use of sensitive raw materials.
3. Create an Integrated TP + Compliance Document
   Incorporate customs compliance and ESG standards into the TP policy:
   • mechanisms for updating customs values,
   • pricing rules considering location factors (e.g., nearshoring vs. offshoring),
   • internal due diligence procedures for suppliers.
4. Ensure consistency in documentation
   TP documentation, customs declarations, commercial invoices, and ESG reports should be consistent. Otherwise, risks arise not only in taxation but also in reputation.

Case study – importing from Asia and ESG obligations

Company X imports electronic components from Asia and supplies them to a related entity in the EU. At the same time, it publishes an ESG report declaring climate neutrality in its supply chain. An audit reveals:

• inconsistencies between invoice prices and customs-tax values,
• undisclosed environmental risks linked to supplier locations.

As a result – the company faces TP adjustments, additional customs duties, and reputational damage in the capital market.

Time for a new TP policy

Transfer pricing policies can no longer operate in isolation from other compliance areas. Adapting them to customs, ESG, and Green Deal requirements not only mitigates risk but also enhances company value in the eyes of investors and regulators.

Looking to update your company’s transfer pricing policy?

Our experts will help you integrate tax, customs, and ESG requirements into one coherent document. Contact us to schedule a free consultation.

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FAQ – frequently asked questions about TP, ESG, and the Green Deal

Do all companies need to incorporate ESG into their transfer pricing policies?

Not all – but companies subject to non-financial reporting obligations (CSRD) certainly should. Moreover, this is an increasing expectation from investors and customers.

Do customs values have to match those in TP documentation?

Customs value is calculated based on principles different from TP, so customs analysis must always accompany pricing for non-EU imports.

Should TP policies address the Green Deal?

Yes – even indirectly. Demonstrating that pricing and location decisions align with environmental policies enhances transparency and compliance.