WORKING WITH THE SPECIALIST
Regular and variable use of an in-house transfer pricing resource helps recognise risks in advance and to implement solution concepts. In other words, any TP related issues are taken into account right from the start as to business decisions and process adjustments. As a result, your company is in the position to save subsequent costs and to reduce tax audit risks or make these at least calculable.
A variable resource available in addition to your own staff, adapted to your requirements (e.g. 1-2 days per week), combines specialist know-how with cost efficiency.
TYPICAL QUESTIONS ON THE SUBJECT OF TRANSFER PRICING
Efficient preparation/update of TP documentation
Do not reinvent the wheel: As a matter of course, existing information, documents and presentations of a group of companies should be used as basic guidelines for the preparation of TP documentation. It is, however, important to know which information is required to be part of the summary key document (Master File). Or: whether simply appending an adapted document suffices to fulfill parts of the required factual or adequacy documentation.
Whether a local or international approach is suitable and efficient to prepare, and regularly update, your TP-documentation depends on the structure and the TP-model of the entire group of companies. In any case: The international TP-documentation approach should be centrally coordinated by an internally responsible specialist, and corresponding TP-processes and TP-guidelines should be drafted and implemented accordingly.
TP enquiries from foreign group companies
What should the formal cost allocation invoice between related companies look like in order to be accepted by the German tax authorities? Which back-up documents should be available in the company records?
Does a so-called “profit mark-up” have to be added to a received / rendered inter-company service? If yes, how high does this have to be in order to fit consistently into the TP-system of the company?
Do I absolutely need a written contract signed in advance or are there other possibilities of minimising the risk of the non-recognition of an operating expenditure in a German tax audit?
In principle, retroactive adjustments of transfer prices are only permitted in Germany if agreed upon in advance between the parties and if they are based on previously defined calculation processes. De-facto, the translation of these regulations in the company‘s day-to-day business process leads to numerous questions, discussions and tax audit risks.