Transfer pricing, valuation for tax purposes
In light of the escalating significance of transactions among affiliated companies within multinational conglomerates, there is an increasing necessity for precise transfer pricing. The relationships between associated parties are progressively coming under the scrutiny and evaluation of national tax authorities, especially regarding their impact on the income tax base. Consequently, well-established and meticulously documented transfer prices can provide you, the client, with a strategic advantage in the event of a tax audit and aid in negotiations with tax authorities.
In the area of transfer pricing, we will be happy to provide you with the following services, in cooperation with tax advisors:
- Input analysis of the transactions with related entities.
- Processing of proposals for new transfer pricing strategies within groups of related entities.
- Preparation and processing of complete transfer pricing documentations.
- Conducting a comparative analysis.
- Assessments regarding the transfer pricing setup, or the arm’s-length range.
- Review and assessments of current price setting.
- The issue of applications for a binding assessment of transfer prices by tax authorities.
- Support in negotiations or representing the client in dealing with tax authorities.
Our primary focus is on preparing comprehensive transfer pricing documentation, the determination of normal market levels of profitability for the provision of services and products, setting royalties for the sharing of intangible assets within the group (trademarks, software) and and determining the interest rates for intra-group financing.
Why RSM SK?
- For these purposes, we use a range of commercial databases, primarily TP Catalyst, RoyaltyRange, and S&P Capital IQ databases.
- We have extensive experience with this issue and being part of the international RSM network allows us to provide our services in an international context in cooperation with a foreign partner company. Among other services, we can also ensure the processing of transfer pricing documentation and studies in the Czech Republic in collaboration with our partner company RSM CZ.
- The expert aspect is crucial in determining or supporting transfer prices. Experts from valuation organizations utilize their years of experience in conducting hundreds of valuations of various types of assets when determining transfer prices.
- We also collaborate with the parent valuation office RSM CZ based in Prague.
Why do we address transfer prices?
In light of the increasing importance of transactions between related parties within multinational groups, there is a growing need for proper transfer pricing. Relationships between related parties are increasingly monitored and assessed by tax authorities of individual states in terms of their impact on the taxable base. Properly set and documented transfer prices will therefore benefit the client in the event of a tax audit and simplify dealings with the tax authorities.
Typical examples of transactions between related parties include the sale of intermediate products or final products, the provision of management services, carrying out marketing activities, the granting of intellectual property rights (licenses), the sale or lease of immovable or movable property, providing financial resources within a group of related parties, providing guarantees, and other forms of security, etc.
According to tax regulations, transfer prices must be determined in compliance with the arm’s length principle, i.e., at a level at which they would be agreed upon between independent parties under similar or identical conditions in normal commercial relationships. Violation of this principle can lead to the imposition of additional tax liabilities including related penalties.
