TRANSFER PRICING CLEARLY EXPLAINED
- The Arm's Length Principle
Transfer pricing revolves around the Arms Length Principle (ALP). In accordance with the Arm's Length Principle, all transactions between affiliated companies must be conducted as if they were independent and therefore unrelated to each other. This is mainly to avoid profit shifting.
It is therefore advisable to provide the necessary substantiation to substantiate the market-based character of the intercompany prices used. This is usually done through a functional analysis supplemented with a benchmark study. The intercompany prices are compared with the pricing between comparable third parties for the provision of comparable goods/services.
- Territoriality principle
National governments and tax administrations are paying more and more attention to maintaining and monitoring market conditions for transactions between affiliated companies. Particularly in an international context, there is a sharper focus, as this means that the tax administration will run the risk of missing out on this taxable matter.
In recent years, transfer pricing has become one of the most important themes in international tax law. Not only large multinationals are confronted with this, also SMEs and family entrepreneurs that are active both within and outside our national borders are becoming more and more aware of the importance of this matter.
HOW OUR ADVISORS CAN HELP YOU
The specialists at VGD are happy to sit down with you to help you make this complex information understandable and also to look internally at how you as a company can carry out everything as well as possible.
- Quick scan: Mapping relevant points for attention and risks of your company and checking whether your company complies with (inter)national regulations and legislation.
- Assistance with transfer price checks.
- Assistance with transfer pricing documentation and the preparation of mandatory transfer pricing documentation.
- Guidance and advice on planning and compliance.
- Practical implementation of your transfer pricing policy both in Belgium and internationally.
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