Part II of this two-part contribution examines whether and how the allocation gap introduced in Part I affects the arm’s length remuneration for the implementation of agentic artificial intelligence (agentic AI) within multinational enterprises (MNEs), and evaluates approaches to closing it. To the extent of the contributions affected by the allocation gap, no arm’s length remuneration can be determined, because the measure by reference to which the OECD Transfer Pricing Guidelines (hereinafter: OECD TPG or Guidelines) determine the arm’s length price – in particular the decision-based functions and risks – is absent. The article therefore asks which requirement a measure must meet by reference to which an arm’s length price can be determined for contributions affected by the allocation gap, and derives the answer from the purpose of the arm’s length principle according to Art 9 OECD Model Tax Convention on Income and on Capital (OECD MTC) itself: Since the arm’s length principle serves to eliminate the effect of special conditions on the levels of profits, a measure by reference to which the arm’s length price is determined must be a condition which the members of an MNE group can neither establish in their intra-group relations without the agreement of a person outside the group who pursues an interest of his own nor maintain against his withdrawal (“market-affected condition").
