Transfer pricing is a major issue for all companies today. Transactions within groups of multinational or local companies significantly affect the results and thus the tax liabilities of the individual entities. This is an area that is highly monitored by the Czech tax administration. If the transfer prices are insufficiently documented, the audit can become a very lengthy and unpleasant process that can result in tax assessments, penalties or interest on late payments.
In addition, the correct setting of transfer prices is not only a tax issue - on the one hand, it will help to protect the owner's assets and simplify flows within the group - on the other hand, the wrong setting can lead to a breach of due diligence and unlimited liability of the managing director.
Dependent transactions are not only transactions between related parties, but also so-called "parent company direction", which means the influence of an independent transaction by a related company, for example:
- the parent company's decision to sell to independent customers at prices determined by the parent company,
- the parent company's decision to source material only from independent suppliers approved by the parent company,
The tax administration is now placing increasing emphasis on documentation being prepared in as transactional a manner as possible. This means that each significant transaction should be subject to a separate test for compliance with the arm's length rules.
Our expert team has extensive experience in preparing transfer pricing documentation for medium and large domestic and international groups. We prepare the documentation in accordance with the OECD and Czech tax administration recommendations.