Your company delivers cross-border internal goods or services. But is your internal pricing 'at arm's length' and are you compliant with the applicable documentation requirements?
Transfer pricing policy for multinationals
Transfer pricing is an area which affects most multinational companies. Tax authorities all over the world are increasingly focused on the pricing used and the transfer pricing policies implemented by multinational companies.
A Dutch tax inspector for example will want to know why you are realising high revenue in other countries and whether this is justified: does this revenue potentially belong in the Netherlands?
In practice, we see that the tax authorities in various countries will ask for such justification. Because each country wants its ‘fair share’.
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Guidelines for transfer pricing
The OESO and the European Union are drafting more, and more extensive, guidelines on transfer pricing. National rules for transfer pricing are therefore getting stricter: the tax authorities are asking for extensive documentation and it can impose fines if the provisions are not met.
This increased focus on transfer pricing places a greater demand on the internal organisation and on reporting. This is because the burden of proof for the correctness of the pricing lies with you as an entrepreneur.
Transfer pricing strategy
It is very important to implement a good transfer pricing strategy and to have sufficient transfer pricing documentation, to be able to justify the division of profit within your Group: even if the effective tax burden at Group level is ‘high’!
Grant Thornton can assist with:
- preparing the transfer pricing documentation;
- reviewing the transfer pricing documentation and policy;
- profit allocation to permanent establishments.
Besides this, we can also support and advise you on minimising risks and in the choice for, and development of, your transfer pricing model and policy. We can also assist you in realising preventative agreements with the tax authorities through advanced pricing agreements (apa). Whether you require support in the Netherlands or internationally, we can guide you every step of the way.