More guidance transfer pricing implications OECD
Recently the OECD has issued an additional guidance on the implementation of transfer pricing documentation and Country by Country reporting.
Within the Country by Country framework, the transfer pricing documentation should consist of the following three elements:
- a master file of information relevant for all group members,
- a local file referring specifically to material transactions of the local taxpayer, and
- a CbC report of information relating to the global allocation of the group’s income and taxes paid and other economic activity information
The guidance of the OECD provides the following clarification:
- Companies with a consolidated annual turnover of more than € 750 million in 2015 are required to prepare Country by Country reporting on an annual basis.
- Country by Country reports are mandatory for the fiscal book years starting on or after January 1, 2016
- Companies have one year to prepare the documents after the close of the financial year. This means that the first country by country report needs to be filed not later than December 31, 2017.
- Countries should provide sufficient legal protection and confidentiality of the reported information.
- Countries should not propose adjustments to the income based upon the income allocation formula contained in the Country by Country report.
- The Country where the head office is located will automatically exchange the reported information of tax payers to the other relevant countries where the company also operates, assuming sufficient legal protection and confidentiality is in place.
Companies that expect to have a worldwide consolidated annual turnover of more than € 750 million in 2015, should review whether the current transfer pricing documentation meets the increased transparency requirements.back to overview