Transfer Pricing

Be the first to know your risks within arm’s length

Irrespective if we talk about profit tax, VAT or the various forms of income tax for associated persons (physical or legal ones, national or international), then we will for sure discuss about transfer pricing and the ROMANIAN REVENUE OFFICE (ANAF) – OFFICE FOR TRANFER PRICING.

An old teaching says that “man plans and God smiles”. If we were to adapt this teaching to the reality of daily tax practice, especially to transfer pricing, we can say that “the manager plans and ANAF smiles”.

It is not accidentally we placed this quote here, but it is because we often note disputes regarding transfer pricing between the ambitious management of associated companies and reluctant tax inspectors following the different approaches between them but also due to the lack of evidence documents for transactions performed with associated parties.

Some examples are:

  1. Services contracts within the group which are interpreted by tax inspectors as profit export or artificial transactions;
  2. The deductibility of expenses which is refused by tax inspectors;
  3. The non-compliance with the cost element structure according to OMFP3055/2009 in cases of invoices issued by one party to the other associated party (parties);
  4. Rigorous plans of controllers to increase selling margins but on the other hand – the strict evaluation of profit margins by tax inspectors;
  5. Sub-contracting agreements between SPVs, which are considered by ANAF to be a clear cut of profits, but without paying the right attention to specific practices in the field of constructions as well as the distribution of functions, risks and assets between associated persons etc.

 The list of examples is long and the processes at the Administrative Appeal Court in transfer pricing cases increase in volume day- to- day.

Taking into account the above we assure you that you may always measure and – more important – reduce significant tax risks with our services for tax fine tuning.

A part of our latest achievements are here.

And because there is only one important thing in transfer pricing: HAVE A PROFITABLE DAY!

Here is a sum-up of our offer:

AUDITING TIME IS BACK!

Review continuously the transactions with associated parties with the purpose of reducing the audit risk!
ANYWAY WE LOOK AT THINGS, EITHER FROM THE ACCOUNTING PERSPECTIVE (OMFP 3055/2009, IAS OR IFRS),  OR FROM THE AUDIT PERSPECTIVE (ISA NORMS), OR THE FISCAL PERSPECTIVE (THE ROMANIAN TAX CODE) IT COMES DOWN TO ONE SUBJECT: DOCUMENTING RELATIONS WITH ASSOCIATED/RELATED PARTIES, TRANSFER PRICING IN STRICT COMPLIANCE WITH:

  1. The order of the ANAF president 222/2008;
  2. The Tax Code and implicitly the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2010;
  3. The Code of Conduct concerning the documentation of transfer prices, published in the Official Journal of the European Union no. C176/1 from July 28th 2006;
  4. Model Tax Convention on Income and Capital, International & EU tax law > tax treaties.

ACCORDING TO ISA AUDIT NORMS: it is not the auditor who documents the relationships between associated/related parties. But the auditor measures the risks depending on the relationships with associated/related parties. The lack of information regarding the terms and conditions between related parties is often difficult for the auditor, when issuing the expected auditor’s opinion.

OMFP 3055/2009 settles in section 11 the obligation to carry out internal controls.

INTERNAL CONTROL/RISK MANAGEMENT refer to all forms of control carried out at the level of the company, including the internal audit, established by the management according to the targets of the company and local regulations in order to ensure the efficient and effective reaching of goals. The control comprises: checking organizational structures, the methods and procedures followed by each department, the document flow which must reach the accounting department.

ACCORDING TO ISA AUDIT NORMS – the auditor must check the existence and function of the internal control with the purpose of measuring risks which might influence significantly financial situations.

ACCOUNTING DIAGNOSIS vs. TAX DIAGNOSIS (A1 or A0) FOR THE FIRST TIME IN ROMANIA YOU CAN OBTAIN FROM A CONSULTANCY THE X RAY OF YOUR COMPANY (IN FORMAT A1 OR A0).

TEAHA MANAGEMENT CONSULTING holds licenses for the same databases as used by ANAF in order to identify, measure and diminish financial and accounting risks. Our services include:

  • Drafting financial and accounting diagnoses on the basis of reports extracted directly from the databases ORBIS, AMADEUS, ROYALTYSTAT, RECOM with financial ratings, comparison of profitability indexes, market indexes, as well as business segments/industriy indexes, identifying the market value/market price/arm’s length value continuously.
  • Drafting fiscal diagnoses following the verification of all fiscal statements, analysis of taxes and identification of fiscal opportunities.
TRANSFER PRICING FILE DRAFTING AND UPDATING THE TRANSFER PRICING FILE FOR ROMANIAN BRANCHES. FILES ARE DRAFTED IN ROMANIAN AND ADDITIONALLY IN GERMAN AND ENGLISH – FOR THE HEAD OFFICES. Our experts are available in order to advise you with the new amendments concerning transfer pricing.The new provisions of OG8/2013 establish that when the taxable base changes following to account’s adjustment, the respective VAT shall be adjusted as well.The advantage of drafting the transfer pricing file in advance is that tax inspectors will need to first fight your documentation with consistent arguments, to justify it and thus the risk of easily estimate the prices or profit margins without a detailed analysis of the transaction within the group is minimized.

 

OUR BENCHMARKING STUDIES ARE SPECIFIC AND ADAPTED TO YOUR COMPANY AND INDIVIDUALLY SITUATION OF YOUR COMPANY. All studies are performed with the same database as used by ANAF: AMADEUS/ORBIS, ROYALTYSTAT, special magazines, studies which are available on the market, price indexes from specialized databases.

FISCAL ADMINISTRATIVE DOCUMENTS COMPETENT CONSULTANCY FOR THE ANALYSIS, CONCEPT, NEGOTIATION OF INDIVIDUAL FISCAL SOLUTIONS AND ADVANCE TAX RULINGS WITH FISCAL AUTHORITIES. We provide qualified advisory in order to solve disputes concerning double taxation of transfer pricing under the provisions of the Arbitration Convention – (Convention 90/436/EEC on the elimination of double taxation in connection with the adjustment of profits of associated enterprises)
ANALYSIS OF EXPENSES AND INCOME IN THE GROUP BEFORE LEAVING THE DEDUCTIBILITY OF EXPENSES WITHIN THE GROUP TO YOUR ACCOUNTANT, ASK US! Approx. 90% of accountants do not stress to get documents for services within the group and consequently they book these expenses as non-deductible expenses. We offer support and answers for each fiscal and accounting document.
CONSULTANCY IN THE FIELD OF DOUBLE TAXATION TREATIES FOR INCOME AND EQUITY INTERNATIONAL FISCAL APECTS: consultancy concerning double taxation conventions and VAT directive (DIRECTIVE 2006/112/EC OF THE COUNCIL from November 28th 2006 concerning the joint system of the value added tax).