The introduction of Amount B represents an important development in the international transfer pricing framework, particularly for multinational groups carrying out routine marketing and distribution activities.
In a recent interview with Paperjam, Vanesa Ramos Ferrín, Managing Partner of TransFair Pricing Solutions, discusses what Amount B means for businesses operating in Luxembourg and why its implementation requires proactive management rather than a purely mechanical application of the new framework.
A simplified approach to baseline distribution activities
Amount B forms part of the OECD’s Two-Pillar Solution and introduces a simplified and streamlined approach to applying the arm’s-length principle to certain in-country baseline marketing and distribution activities.
The objective is to improve tax certainty, reduce administrative complexity and limit transfer pricing disputes concerning qualifying routine distributors. The framework provides a standardised method for determining the return earned by an eligible distributor, based on the characteristics of the business and the relevant industry grouping.
However, simplification does not mean that every distribution arrangement automatically qualifies.
The Amount B guidance includes detailed scoping requirements. Eligible distributors must generally perform baseline functions and must not own unique and valuable intangibles or assume certain economically significant risks. Some activities and transactions, including the distribution of particular categories of products, may also fall outside its scope.
Luxembourg’s approach to Amount B
In April 2026, the Luxembourg tax administration issued a circular setting out how the Amount B framework applies in Luxembourg in relation to covered jurisdictions.
The circular applies to financial years beginning on or after 1 January 2025 and establishes the conditions under which Luxembourg will recognise the simplified and streamlined approach for qualifying marketing and distribution arrangements.
As Vanesa explains in the interview, Luxembourg’s recognition approach represents a meaningful step forward. Nevertheless, taxpayers must still demonstrate that their arrangements genuinely fall within the intended scope of Amount B.
Segmentation remains essential
The analysis becomes more complex where a Luxembourg entity combines routine distribution with other activities.
A company may, for example, perform distribution functions alongside manufacturing, procurement, financing, research and development, strategic marketing or other services. In such circumstances, the financial results associated with the baseline distribution activity may need to be identified and separated from those arising from the entity’s other functions.
Reliable segmentation is therefore essential. Businesses must be able to demonstrate which revenue, expenses, assets and risks relate to the qualifying distribution activity and which belong to activities outside the Amount B framework.
The Paperjam interview highlights that, for groups combining distribution with other functions, the central issues remain segmentation and economic substance.
Substance cannot be replaced by restructuring
Groups should also avoid restructuring arrangements solely to obtain access to the simplified approach.
An entity’s classification must reflect its genuine functional profile, including the functions it performs, the assets it uses and the risks it assumes. Contractual changes that are not supported by operational reality are unlikely to provide a sustainable basis for applying Amount B.
Artificially reorganising activities to bring an entity within the framework may instead attract greater scrutiny from tax authorities.
A proactive management exercise
Amount B may reduce the complexity associated with pricing qualifying baseline distribution activities, but its application still requires careful preparation.
Multinational groups should assess their distribution structures, determine whether the relevant transactions meet the scoping criteria, review the availability of segmented financial information and ensure that intercompany agreements remain consistent with actual conduct.
The key message is clear: Amount B offers simplification within its defined scope, but it does not remove transfer pricing risk. Proactive analysis, appropriate documentation and alignment with economic substance remain fundamental.
