This article analyses the ECJ decision in Hornbach-Baumarkt (C-382/16) from 31 May 2018 and its implications for the transfer pricing legislations of EU Member States. First, to argue that cross-border transactions targeted by the arm’s length principle are comparable to purely domestic ones, the article scrutinizes the situations when the application of the transfer pricing rules is domestically relevant. Second, the article examines the justification of balanced allocation of taxing powers to the restrictive measure and its possible criteria for proportionality. Finally, the article analyses whether the ECJ allows related parties to act on non-arm’s length terms within the European Union.