19th January 2015
On November 14th, specialists of the MGI European Transfer Pricing Practice Group met in Amsterdam. Members of the group came from Hungary, Germany, Italy, Austria, Romania, and the Netherlands to discuss their experiences and differences per country on the transfer pricing documentation. A participant from South Africa also joined via Skype.
Transfer pricing is becoming an increasingly important topic in international transactions thanks to developing awareness of tax administrations it can be an effective tool to improve collection of taxes.
Zoltán Paksy, European Executive Director at MGI says, “It is great to see members actively participate in our first European practice group. We had a team of 9 members coming from six European countries. A participant also joined us from South Africa via Skype. It enables members to share experiences and in turn offer international clients cross-border expertise on the subject.”
László Killik from BPO AUDIT TAX took the lead, with able support from Zoltán and one of MGI Europe’s newest member firms, B&P Performance Group, hosted the event at their offices in Amsterdam.
Transfer Pricing documentation
During the meeting Wicher-Henk Krabbe from member firm B&P Performance Group gave an introduction on the latest OECD publications on transfer pricing.
In 2013 a new project within the OECD started: the Base Erosion Profit Shifting project (BEPS). An action plan of 15 initiatives was published. In this action plan, the transfer pricing issue is also addressed. On the G20 conference in September 2014 (amongst others) the transfer pricing was more elaborated in more depth. One of the main goals is to enhance transparency of intergroup transactions and performances for multinational enterprises (MNEs). The OECD proposed a different approach of the transfer pricing documentation. Actually, transfer pricing documentation is performed on a local level in each individual country, mostly following the local rules (more or less following the OECD Guidelines).
Now a 3-tier approach is promoted: (a) a master file; (b) a local file per country; and (c) a country-by-country template.
The Master File is to be composed at the MNE’s headquarters and describing the group as a whole (activities, organisation, branches, financial details etc.). This file must be available in each jurisdiction where the MNE holds activities and / or subsidiaries.
Locally, the extensive transfer pricing documentation must be performed, whereby OECD is stimulating harmony between countries. Furthermore, a country-by-country template must be available in every jurisdiction where the MNE holds activities.
Although implementation of the new transfer pricing guidelines should be executed by both national law and bilateral treaties, it can be expected that the European Commission will also address this issue, with recent affairs like Luxleaks putting tax evasion on the international political agenda.
MGI members who participated:
Gabriele Grumbeck-Bloech - Steirer Mika & Company, Austria
Monia Bouncompagni - Studio Pragma, Italy
Sjoerd Kuipier - Verstegen auditors and consultants, Netherlands
Wicher-henk Krabbe - B&P Performance Group, Netherlands
Erik van der Kooi - B&P Performance Group, Netherlands
László Killik - BPO AUDIT TAX - Hungary
Teofil Teaha - Teaha Management Consulting SRL, Romania
Gunnar Schwede - Gräwe & Partner GmbH, Germany
Zoltan Paksy - MGI European Area
Eloneor Ebobisse – MGI Bass Gordon GHF (via Skype)
Next European Practice Group
The MGI European Transfer Pricing Group will meet again in Bremen next year before the coming Central Circle meeting in Germany.
It is to be expected that OECD will have published more in-depth information on the new transfer pricing rules.
If you would like to be continuously updated on the work of the European MGI TP Group please join our LinkedIn group: MGI Europe - Transfer Pricing Practice Group or contact firstname.lastname@example.org