Contact UsFor a company that has worldwide operations and is growing quickly past $1B, what are the schools of thought on "OECD transfer pricing reports"? I would like to save both budget and time, however, I am concerned about the trade-offs I would be making over local-country documentation. Thoughts?
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Cherie Lehman
I assume you are referring to the Master File concept of the code of conduct regarding EU Transfer Pricing Documentation?
The Joint Transfer Pricing Forum developed the Code of Conduct on EU TP documentation. The objectives were primarily to reduce compliance costs and to simplify the documentation requirements.
Under the EU TPD approach, the documentation actually consists of two parts:
1.Master File containing information relevant for all group entities in the EU; and
2.Local File that contains country specific data
The Masterfile concept is generally accepted by EU tax administrations and is often used by large multinationals - it is not typically the standard approach adopted by smaller organisations.
The Masterfile approach may be useful where material intercompany transactions are standardised across the EU. Additional work is required where there are significant differences between countries, and remember that certain countries require the use of local language and local comparables, which cannot be ignored even when adopting the Master File approach.
Whether the Master File is a more efficient and cost effective transfer pricing documentation process for your growing organisation depends on the facts and needs of the group. Contact us to discuss further - we can assist you in assessing which option is best for your group.
Best regards
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581 weeks ago
The Joint Transfer Pricing Forum developed the Code of Conduct on EU TP documentation. The objectives were primarily to reduce compliance costs and to simplify the documentation requirements.
Under the EU TPD approach, the documentation actually consists of two parts:
1.Master File containing information relevant for all group entities in the EU; and
2.Local File that contains country specific data
The Masterfile concept is generally accepted by EU tax administrations and is often used by large multinationals - it is not typically the standard approach adopted by smaller organisations.
The Masterfile approach may be useful where material intercompany transactions are standardised across the EU. Additional work is required where there are significant differences between countries, and remember that certain countries require the use of local language and local comparables, which cannot be ignored even when adopting the Master File approach.
Whether the Master File is a more efficient and cost effective transfer pricing documentation process for your growing organisation depends on the facts and needs of the group. Contact us to discuss further - we can assist you in assessing which option is best for your group.
Best regards
Alessandro Grandolfo
Mrs. Lehman just told you everything.
I could add some suggestions relating to your business growth.
Considering that the TP Legislation is almost in common with alla EU countries, you could evaluate if something particular is needed on a local level.
In Italy for example, the Tax Adm. needs the indication of the Country/Master file existance inside the annual tax return (there's a cell to be marked); if not applied a tax assessment should occur (at your own risk), if applied the IT Tax Adm. will request the file to evaluate the content and comparables utilization.
Above this, following which kind of growth your Company had in terms of revenues, i could suggest to file a local or a country file also to understand and go deeper inside business flows and operations for specific countries (outside the mother company's one), in order to be warned if an inspection arise.
This was the choice we made in our company even if the Country file is not stricly mandatory.
Kind regards
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581 weeks ago
I could add some suggestions relating to your business growth.
Considering that the TP Legislation is almost in common with alla EU countries, you could evaluate if something particular is needed on a local level.
In Italy for example, the Tax Adm. needs the indication of the Country/Master file existance inside the annual tax return (there's a cell to be marked); if not applied a tax assessment should occur (at your own risk), if applied the IT Tax Adm. will request the file to evaluate the content and comparables utilization.
Above this, following which kind of growth your Company had in terms of revenues, i could suggest to file a local or a country file also to understand and go deeper inside business flows and operations for specific countries (outside the mother company's one), in order to be warned if an inspection arise.
This was the choice we made in our company even if the Country file is not stricly mandatory.
Kind regards