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);
- 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.
- ATIPIC Solutions attended the Tax & Finance Forum 2019 May 30, 2019
- DAC 6 – New EU tax mandatory disclosure rules with regard to cross – border transactions May 13, 2019
- Countries in the European Union that accept the transfer pricing documentation in English language April 12, 2019
- Country by Country Reporting in European Union November 22, 2018
- The role of the financial manager in preparation of the transfer pricing documentation October 12, 2018