Transfer pricing and customs valuation do not test related-party pricing in the same way. Transfer pricing reviews arm’s length outcomes, while customs valuation focuses on the import transaction price and whether the relationship influences that price What is the difference between transfer pricing and customs valuation? Transfer pricing and customs valuation may apply to the
Do Transfer Pricing Adjustments Trigger VAT? Transfer pricing adjustments made to correct intra-group prices do not automatically create a VAT liability as a separate supply of services. The CJEU confirmed this in Stellantis Portugal (C-603/24), ruling that a price change affects the taxable amount of the original transaction – not a new one. Introduction The
The OECD’s January 2026 Side-by-Side Safe Harbor limits the application of Pillar Two’s Income Inclusion Rule and Undertaxed Profits Rule to eligible US-parented multinationals. Where validly elected, top-up tax under those two rules is treated as zero. The Qualified Domestic Minimum Top-up Tax, however, continues to apply in every jurisdiction that has adopted it. Five
The Profit Split Method (PSM) is one of five OECD-recognized transfer pricing methods. It identifies the combined profits from controlled transactions and allocates them between related parties based on their contributions. It applies most appropriately when both parties make unique contributions, share significant risks, or operate in highly integrated structures. How to Apply the PSM:
The Transactional Net Margin Method (TNMM) benchmarks a tested party’s net profit margin against comparable independent companies. It is the most widely used transfer pricing method globally. It works best for routine entities such as distributors, contract manufacturers, and service providers. When a multinational group prices transactions between related parties, tax authorities require those prices
The resale price method (RPM) is one of three traditional transaction methods under the OECD Transfer Pricing Guidelines. It works by deducting an arm’s length gross margin from the resale price charged to an independent customer. The result is the arm’s length transfer price for the original intercompany transaction. What Is the Resale Price Method?
The OECD recognizes five transfer pricing methods for pricing intercompany transactions: CUP, RPM, CPM, TNMM, and PSM. A sixth method – not formally part of the OECD framework – applies to commodity transactions in several jurisdictions. Choosing correctly, and documenting that choice, is critical for any multinational group. How to Select a Transfer Pricing Method
Under both the OECD Transfer Pricing Guidelines and US regulations, a related-party distributor can be a loss-making entity. Losses are permissible when justified by a functional analysis, a documented business strategy, or adverse economic conditions – provided the losses are not open-ended and remain consistent with arm’s length behavior. How to Assess Whether a Distributor’s
Low value-adding intra-group services (LVAS) are routine support functions – such as HR, IT, and accounting – that do not create unique intangibles or carry significant risk. Under Chapter VII of the OECD Transfer Pricing Guidelines (2022), qualifying services may be priced using a fixed 5% mark-up on eligible costs, with no benchmarking study required.
Country by country reporting (CbCR) is an annual filing obligation for large multinational enterprises (MNEs) under OECD BEPS Action 13. MNE groups with consolidated revenues at or above EUR 750 million must report their income, taxes paid, employees, and assets across every tax jurisdiction in which they operate. How to Comply with CbCR: Five Key
It depends. Some countries ask for the local file preparation if there are transactions, no matter the value of them, some ask only if the transaction or entity exceeds a set threshold. To understand if you need to have a local file documentation, you need to consider a few main aspects:
Global minimum tax is an OECD initiative introduced as a part of the BEPS program. The idea behind this initiative is to ensure that big multinational corporations are taxed at an effective tax rate of at least 15%. Most countries added this initiative to their local legislation. The entry into force date varies among the countries, for example, the EU has implemented the regulation from January 2024.
Amount B is a part of Pillar One from the OECD BEPS program. The purpose of Amount B is to act as a safe harbor for baseline marketing and distribution services.
Currently, the future of Amount B isn’t clear. As its implementation is optional, some countries including Germany and the Netherlands, already announced that they aren’t going to implement it.
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