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thin capitalisation and transfer pricing are related but slightly different concepts. Some consider that thin capitalisation rules are a specific expression of transfer pricing rules.

EU law applies in the context of thin capitalisation and transfer pricing in that, although direct tax is not within the competency of the EU, domestic rules must still comply with general principles of EU law and with the treaty in force at the time (currently the Treaty of the Functioning of the European Union) (the Treaty).

The key Treaty provisions relevant to thin capitalisation and transfer pricing are those on non-discrimination in respect of the fundamental freedoms. Potentially applicable freedoms are:

1. •

   freedom of establishment

2. •

   free movement of capital, and

3. •

   free movements of goods and services