Benchmark analysis for transfer pricing

18/10/2016

In this blog, you will learn more about the concept of transfer pricing, and how a benchmark analysis can lead to a transfer pricing system that complies with present national
and international legislation. You can read also about the European ‘arm’s length principle’ on which the new legislation on transfer pricing is based on. Firstly, it is explained what that arm’s length principle stands for.

 

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The European arm’s length principle implies that transfer prices on which related parties agree on in their legal relationships, may not differ from what independent parties would have agreed on. Related parties are forced to do business with each other at arm’s lenght. These related parties also include multinationals and their subsidiary companies, but also sister companies, et cetera. When an unbusinesslike price has been agreed to, a correction has to occur untill an arm’s lenght price has been reached. The arm’s lenght principle also counts when it comes to the relation between related natural persons (within a family), as well as the relation between stock holders and their B.V.’s, et cetera.

Ever since the publication of the OESO Action plan in 2013, the global fiscal world has yet another issue. BEPS, standing for Base Erosion and Profit Shifting. It is growing more famous and important as we speak, and by this year the action plan has to be implemented successfully in European countries.

According to the parlementary explanation, the law makers intent to reach two goals, namely 1) creating as much equality as possible between fiscal profits of related and independent companies and 2) preventing of unbusinesslike profit shifting between (mostly globally operating) related bodies. It is clear that the arm’s lenght principle is an essential part of the corporate tax.Without this regulation the corporate tax in related relations would be eroded by taxable persons. However, this doen not automatically imply that the application of the arm’s lenght principle alone will lead to an upward profit correction.

Benchmark analysis tailored for transfer pricing

Of course, this is just an introduction to BEPS.  There are more regulations and obstacles that you may not have heard about. Fortunately, our tax specialist Hendrik Van Duijn offers a variety of tax compliance services. Transfer pricing is one of those services, and they range from low cost benchmarking analyses to tailor-made transfer pricing solutions. These solutions will contribute to a transfer pricing system that complies with present national and international legislation. Duijn Tax Solutions offers you a variety of options.

Not only can you choose for a straight forward transfer pricing benchmark analysis, but also review existing benchmark analyses and refresh them. In addition,  Duijn Tax Solutions offers a transfer pricing monitoring service to ensure you are in control of transfer pricing risk and adjustments. Click here for the new brochure: dts-transfer-pricing-offering-2016

Or click here to contact our tax advisor Hendrik Van Duijn immediately.

 

 

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