Choosing a transfer pricing tax consultant08 December 2023
Both the preparation of the transfer pricing file and the appeals drawn up in response to the adjustments made by the inspectors of the Ministry of Finance, as well as the preparation of the comparability studies themselves must be prepared by a specialized tax consultant as they require the use of certain databases, and of course, detailed knowledge of the legal framework specific to transfer pricing.
First of all, comparability studies cannot be carried out without the assistance of a tax consultant since the costs of databases are very high, and it is not profitable for the client to register such high expenses. It is advisable to have comparability between the databases used by the tax consultant and the databases used by the Ministry of Finance (TP Catalyst, Orbis).
Secondly, among the tax consultants who deal with the preparation of the transfer pricing file, very few also offer assistance in the event of a tax audit. This aspect of audit assistance can become critical when effective communication between the audited company and the tax inspectors can make the difference between a report favourable to the company and one that opens up unpleasant questions. Ideally, the transfer pricing consultant should be the same one who maintains the relationship with the authorities during the control period.
Thirdly, the tax consultant’s experience in documenting transfer pricing files for companies in similar industries is another important aspect, as knowing certain industry specifics is a definite advantage for the file to be prepared in accordance with industry specifics, respectively the related legislative framework.
A fourth important aspect is represented by the communication of the risks to which society is exposed. A tax consultant must make it clear from the outset that loss-making companies are prone to tax audits. Following the tax audit, the reasons for recording losses for the companies in question are verified and subsequently, if necessary, the tax authorities can decide to adjust the transfer prices, recalculate the related taxes and fees, with penalties. A tax consultant can demonstrate that intra-group transactions follow the market price and communicate the estimated risks to the company.
A final important aspect is determined by the retrieval and processing of certain information provided by the company. For example, in the transfer pricing file, there are sections about the group to which the company belongs, respectively the history of the group, its activity, the business model itself, information that a tax consultant can identify on the websites of the group in question, in the reports prepared annually, without having to request them from the representatives of the member company of the group. Additionally, especially in terms of time efficiency, the fact that a tax consultant can determine intra-group turnovers based on financial statements / ledger sheets / other documents received from the company can represent an advantage for the latter, without the need for the company itself to calculate turnovers or incur other additional administrative costs generated by this operation.
In conclusion, the 5 aspects presented above are essential for a company that wants to benefit from a transfer pricing file, correctly prepared comparability studies, respectively assistance in the event of a company-wide fiscal audit carried out in accordance with the regulations on compliance with the principles provided by article 11 of the Fiscal Code and related Methodological Norms, by the OECD Transfer Pricing Guidelines and those provided by the EU Code of Conduct regarding transfer pricing documentation.
Junior Transfer Pricing Consultant