What is a transfer pricing file?

The transfer pricing file is the only tool by which related companies can prove to tax authorities that they carried out intra-group transactions with their "sisters" at market prices by which they have not distorted the taxable base.

Related parties from all countries in the European Union have to prepare and present transfer pricing documentation either contemporaneous (especially in case of large taxpayers or large groups) or upon the request of tax authorities.

Note that although not all companies are required to prepare the transfer pricing file annually, they are nevertheless required to conduct intra-group transactions at market value.

Moreover, even though in some countries there is no specific law providing that taxpayers should prepare transfer pricing documentation (e.g. Bulgaria, United Kingdom), in practice, the tax authorities can and actually request the transfer pricing documentation file in these countries too.

The penalties for non-compliance with documentation and reporting requirements in European Union member states are different, but they can be classified in the following categories:

  • additional corporate income tax payable;
  • fines for inexistence or incomplete documentation;
  • fines for negligence or gross negligence (generally applied as percentage applied to additional tax base or to the transfer pricing adjustments);
  • interest;
  • late payment penalties.

In every case, the penalties can be avoided if proper documentation is prepared and the transfer prices are at arm’s length.

How we can help?

ATIPIC Solutions can assist you with preparation of a transfer pricing file that is in line with transfer pricing legislation and ever-stricter documentation requirements.

The transfer pricing files prepared by ATIPIC Solutions meet the requirements of the most demanding tax auditors and may help you to avoid unnecessary discussions with the tax authorities while they will also help you to avoid transfer pricing adjustments.

Key benefits

Assessment of the risks

After the preparation of a transfer pricing file, a memorandum will be compiled.

Within this memorandum we will emphasize all the potential risks for transfer pricing adjustments per each category of transactions.

Identification of solutions to minimize the risks

Based on the risks that we will identify, we can work together to identify solutions to minimize the risks identified.

Recalibrate the transfer pricing methodologies

Apart from minimizing the risks for past transactions, we will also help you in recalibrating your transfer pricing methodologies.

This recalibration of the transfer pricing methodologies will ultimately help you in avoiding any future transfer pricing uncertainties.