A significant number of cross-border transactions take place on a daily basis and many of these transactions are between entities which are part of the same multinational group. The group has to price these transactions (the ‘transfer price’) in accordance with complex international tax rules which determine how much of the total group profit is recognised and therefore taxed in each country.
A multinational group can choose to locate part of its business processes, assets and risks in a low tax jurisdiction, and the application of transfer pricing rules will determine the level of profits that should be attributed to that part of the business. The UK tax authorities, and tax authorities in other jurisdictions, will challenge the transfer pricing adopted by multinational groups if they feel the prices are being manipulated to artificially divert profits away from the functions and risks of the group.
The UK transfer pricing rules are based on an agreed international standard developed by the Organisation for Economic Co-operation and Development (OECD). The onus is on the tax payer to develop and maintain documentation supporting the transfer pricing methodology adopted and prices applied to group transactions.
At Blick Rothenberg we provide a tailored service to meet our clients' transfer pricing needs. Whether this is helping you understand how transfer pricing impacts your business, identifying the most appropriate transfer pricing methodology and benchmarking comparable pricing ranges, or helping you design an effective and efficient business model, we can assist.
Recent examples of our work include
- Helping a FTSE 100 company benchmark the distribution service provided to overseas subsidiaries
- Producing transfer pricing documentation, including a benchmarking study, for the UK subsidiary of a Dubai entity engaged in the development of the group website
- Assisting a listed US group comply with transfer pricing obligations for their European distributors
- Producing transfer pricing documentation for a UK sales and marketing subsidiary of a large multinational group, parented in the US
Our tax team has a wealth of transfer pricing experience and all our engagements are partner-led. We also work with our international association of BKR member firms to ensure a holistic approach to your transfer pricing obligations and opportunities worldwide.