The 2025 Eighth Circuit decision in 3M Company & Subsidiaries v. Commissioner of Internal Revenue marks a turning point in how cross-border intercompany payments are treated under U.S. transfer pricing law. The court ruled that the IRS may not reallocate income under § 482 Internal Revenue Code when it is illegal for a foreign subsidiary to make such payments. This will have fundamental consequences for European multinationals, specifically in terms of transfer pricing compliance, documentation, and applying OECD standards and Pillar II rules.
