All Posts By

Vanessa Ramos Ferrin

17 October 2022
0

TFPS was awarded in the Leaders League 2023

By | Announcements

The Leaders League awarded TransFair Pricing Solutions (“TFPS”) with the notation “Excellent” within the Best Transfer Pricing Agencies – ranking 2023 – Luxembourg.

This notation is thanks to the positive feedback of our clients and peers, and it recognizes TFPS’s high quality, expertise, commitment, independence, and fair solutions in the market.

Leaders League’s rankings comprise extensive research and interviews with company executives, in-house counsel, associations, institutions, and industry experts.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

All details about the ranked companies are available at this link.

Leadersleague2023

 

28 September 2022
0

TFPS was awarded in the World Transfer pricing 2023

By | Announcements

The International Tax Review (ITR) awarded TransFair Pricing Solutions (“TFPS”) with tier two ranking in the 2023 World Transfer Pricing guide. This tier rating is thanks to the positive feedback of our clients and peers, and it recognizes TFPS’s high quality, expertise, commitment, independence, and fair solutions in the market.

The World Transfer Pricing 2023 is a comprehensive guide to the world’s leading transfer pricing practitioners, which includes rankings and profiles of the most effective professionals in the world on this field, covering over 64 jurisdictions on every continent. ITR editorial team’s research produced this guide based on the feedback from the market and tax professionals around the world.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

All details about the ranked companies are available at this link.

 

4 January 2022
0

TFPS was awarded in the Leaders League 2022

By | Announcements

The Leaders League awarded TransFair Pricing Solutions (“TFPS”) with the notation “Excellent” within the Transfer pricing tax – ranking 2022 – Auditing and accounting firms – Luxembourg.

This notation is thanks to the positive feedback of our clients and peers, and it recognizes TFPS’s high quality, expertise, commitment, independence, and fair solutions in the market.

Leaders League’s rankings comprise extensive research and interviews with company executives, in-house counsel, associations, institutions, and industry experts.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

All details about the ranked companies are available at this link.

7 November 2021
0

TFPS was awarded in the World Transfer pricing 2022

By | Announcements

The International Tax Review (ITR) awarded TransFair Pricing Solutions (“TFPS”) with tier three ranking in the 2022 World Transfer Pricing guide. This tier rating is thanks to the positive feedback of our clients and peers, and it recognizes TFPS’s high quality, expertise, commitment, independence, and fair solutions in the market.

The World Transfer Pricing 2022 is a comprehensive guide to the world’s leading transfer pricing practitioners, which includes rankings and profiles of the most effective professionals in the world on this field, covering over 64 jurisdictions on every continent. ITR editorial team’s research produced this guide based on the feedback from the market and tax professionals around the world.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

All details about the ranked companies are available at this link.

6 July 2021
0

TFPS wins award at Global Advisory Experts 2021

By | Announcements

The Global Advisory Experts (GAE) awarded TransFair Pricing Solutions (“TFPS”) as Transfer Pricing Advisory Firm of the Year in Luxembourg – 2021.

GAE has conducted its extensive nomination and research process for its 12th Annual GAE Awards. The shortlisted candidates were judged on client testimonials, key cases, rankings, overall reputation, publication contributions, speaking engagements and the performance and standing of teams and individual experts.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

GAE is one of the world’s leading online resources for locating specialist advisers for the services required by businesses, investors and individuals around the world with over 40,000 users visiting our website each month. GAE is the premier guide to leading advisory experts throughout the world. It is the only organisation to recommend just one expert in each chosen specialism and country.

All details about the winner companies are available at this link.

 

 

 

10 March 2021
0

TFPS was awarded in the Leaders League 2021

By | Announcements

The Leaders League awarded TransFair Pricing Solutions (“TFPS”) with the notation “Highly recommended” within the Transfer pricing – ranking 2021 – Law firm & Agencies – Luxembourg.

This notation is thanks to the positive feedback of our clients and peers, and it recognizes TFPS’s high quality, expertise, commitment, independence, and fair solutions in the market.

Leaders League’s rankings comprise extensive research and interviews with company executives, in-house counsel, associations, institutions, and industry experts.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

All details about the ranked companies are available at this link.

14 January 2021
0

New OECD guidance for Transfer pricing implications of the COVID-19 pandemic

By | Regulations update

A. Background & Scope

On 18 December 2020, the new Guidance on the transfer pricing implications of the COVID-19 pandemic was released by the OECD. This Guidance represents a consensus view of the 137 members of the Inclusive Framework on BEPS regarding the application of the arm’s length principle and the OECD Transfer Pricing Guidelines.

This guidance focuses on how the arm’s length principle and the OECD TPG 2017 apply to certain issues that may arise or be exacerbated in the context of the COVID-19 pandemic. In addition, this guidance is helpful both for taxpayers in reporting the financial periods affected by the pandemic and for tax administrations in evaluating the implementation of taxpayers’ transfer pricing policies.

B. Priority issues

This Guidance provides 31 pages with comments, illustrations, and the practical application of the arm’s length principle in four priority issues:

  • comparability analysis.
  • losses and the allocation of COVID-19 specific costs.
  • government assistance programmes.
  • advance pricing agreements.

The following points highlight the scope and additional analyses necessary for managing each priority issue:

         1. Comparability analysis

The pandemic may have a significant impact on the pricing of some transactions between independent enterprises and may reduce the reliance that can be placed on historical data. The impact may be a non-reliable comparability analysis.

This issue may require an analysis of the following aspects:

    • Sources of information
    • Forecasted financial information
    • Timing of information of comparables
    • Arm’s length outcome testing approach
    • Application of more than one transfer pricing method
    • Financial information from the global financial crisis 2008/2009
    • Price adjustment mechanisms in controlled transactions approach
    • Use of loss making and existing set of comparables.

2. Losses and the allocation of COVID-19 specific costs

The allocation of losses between associated entities can give rise to disputes, and even more given the probable increase in the frequency and magnitude of losses in the current economic environment.

This issue may require an analysis of the following aspects:

    • Risk assumption among what entities operating under limited risk arrangements may incur losses.
    • Circumstances under which arrangements may be modified.
    • Allocation and comparability aspects of operational or exceptional costs between related parties.
    • Impact of the force majeure clauses on the allocation of losses.

3. Government assistance programmes

Grants, subsidies, forgivable loans, tax deductions, investment allowances, broader financial or liquidity supports together qualified as “government assistance programmes” could potentially have transfer pricing implications on the accurately delineated controlled transaction.

The impact may happen whether the government assistance is provided to a member of a multinational enterprise “MNE” group directly or made available to independent parties within the market where an MNE group operates.

This issue may require an analysis of the following aspects:

    • Economic relevant characteristic of the government assistance in the local and counterparty jurisdiction.
    • Effect of the receipt of government assistance on the comparability analysis and pricing & allocation of risk of a controlled transaction.

 4. Advance pricing agreements (“APA”)

The existing unilateral, bilateral, and multilateral APAs might be not applied correctly because of disregard of the terms and breach of the critical assumptions as consequence of change in economic conditions driven by the pandemic.

This issue may require an analysis of the following aspects:

    • Boundaries of existing APAs considering the changes in economic conditions
    • Reasons applicable for breaching a critical assumption
    • Reactions of the tax administrations against the failure to meet critical assumptions
    • Timing for notifying to the tax administrations the failure to meet critical assumptions
    • Documentation for supporting the failure to meet critical assumptions
    • Reactions of the tax administrations against the non-compliance of an existing APA
    • Impact of COVID-19 on APAs under negotiation

5. Takeaways

The application of the guidance for tackling the transfer pricing issues of the COVID-19 pandemic imply a cooperation between the tax administration and taxpayers in terms of flexibility and the exercise of good judgment.

In that regard, the next steps should be performed by taxpayers to ensure the application of this guidance on the existing and upcoming controlled transactions of the year 2020 and year 2021 (“intercompany transactions”), respectively:

    • Review intercompany transactions and relevant documents impacted by the COVID-19 pandemic.
    • Identify which of the four priority issues affects the application of the arm’s length principle on the intercompany transactions.
    • Perform a risk assessment including the revision, identification, and quantification of the possible risks in connection with the intercompany transactions.
    • Understand in details the comments expressed in the new guidance in connection with the priority issue(s).
    • Prepare a transfer pricing documentation, including the analyses described in the new guidance in connection with the priority issue(s).
    • Verify the alignment of the information reflected in the transfer pricing documentation with the COVID-19 market conditions and actual conduct of the parties involved in the intercompany transactions.

Transfer Pricing Webinar
Register for our Webinar on 12th February at 10h00 AM to learn more about this new OECD Guidance.

 

13 January 2021
0

Court decision about exchange of information requests in a transfer pricing audit

By | Court cases update

On 16 December 2020, the Higher Administrative Court (“HAC”) ruled in favour of the Luxembourg Tax Authorities (“LTA”) in an appeal (N ° 45072) initiated by an Anonymous Company (“Luxembourg Company”), requesting an annulment of an information injunction arising from an exchange of information procedure between Luxembourg and Belgium.

The information injunction includes the request of information and documents of a related party in Belgium (“Belgium Company”) in connection with certain services received by the Luxembourg Company.

A. Background and facts

  • On 21 August 2020, the competent authority of the Belgian tax administration sent to the LTA a request for information of the Luxembourg Company under the tax convention between Luxembourg and Belgium.
  • On 7 September 2020, the director of the LTA addressed to the Luxembourg Company an information injunction to request different information and documents in connection with certain services received by the Luxembourg Company from the Belgium Company for the period from 1st January 2017 to 31st December 2019. In a nutshell, the request concerns to the employees, management, functions, contact details, facilities, and activities of the Belgium Company.
  • On 7 October 2020, the Luxembourg Company requested to the HAC the annulment of the information injunction by arguing among others a failure to state the reasons or motivation of the request and a violation of its rights of defense.
  • On 22 October 2020, the delegate of the LTA requested that the appeal should be dismissed. He refuted the arguments expressed by the Luxembourg Company and added among others the following:
    • Description of the circumstances provided and carried out by the Belgian tax administration during its investigation on Belgian territory. In brief, the description includes:
      • Background of the activities of the Group,
      • Re-invoicing of services with a low margin,
      • Nonalignment of functionalities described in the transfer pricing study (“first TP Study”) versus actual conduct of the parties, and
      • Discrepancies with regards to the invoices issued by the Belgium Company (containing fictitious invoices for purchase of products and provision of services).
    • The request should allow the Belgian tax administration to determine with precision the activities and functions carried out and the real profit of the companies, as well as the part of its taxable basis in Belgium.
  • On 9 November 2020, the Luxembourg Company filed an additional brief and added among others the following:
    • Failure by the Belgian tax authorities to have exhausted all the internal means of investigation, including the obtention of an updated version of the transfer pricing study (“second TP Study”) and other documents justifying the adoption of its transfer pricing policy.
    • Reliance on an opinion drawn up by an independent auditor according to which the transfer pricing policy applied by the group would comply with the TP Study.
    • The perception of a low margin could be explained by the fact that Belgium Company would have been qualified as a tested party with limited functions and risks.
    • Allegation that the activities and functions were carried out by the Belgium Company would be described in the said second TP Study.
  • On 23 November 2020, the delegate of the LTA filed an additional brief for adding among others:
    • the request would indicate that the competent authority of Belgium had exhausted its usual sources of information.
    • the role of the Luxembourg authorities would be limited to verifying the consistency of all the explanations presented by the requesting authority based on its request.
    • The purpose of the request would be to verify whether:
      • the activities of the Belgium Company were carried out, organized, diligent, and monitored from the Luxembourg Company during the period concerned and
      • the profits of the Belgium Company should, at least partially, be reallocated either in the accounts of the said Company or taxed in a permanent establishment in Belgium for the period concerned.

B. The Court’s decision

On 16 December 2020, the HAC concluded that the appeal is dismissed due to lack of foundation. Therefore, the HAC rejected it and ruled the following:

  • Failure to state reasons for the information injunction must be rejected to be unfounded.
  • The information injunction is based on a sufficiently reasoned request from the Belgian tax administration, it must therefore be considered having been validly issued with regard to the Luxembourg Company.

 C. Takeaways

  • Action for annulment of an injunction decision requires careful consideration and precaution.
  • Transfer pricing audits continue to be one of the drivers of international cooperation between tax authorities via exchange of information procedures.
  • The information requested via the injunction allows us to have a view on the recent trends of transfer pricing audits of intercompany services. The request confirms the importance of:
  • Verifying the economic rationality of the transactions,
  • Checking the alignment of functionalities expressed in transfer pricing documentation with the actual conduct of the related parties.
  • Confirming that the arm’s length remuneration is in accordance with the actual conduct of the related parties.
  • Validating the proper application of the transfer pricing policy within the Group.
  • Ensuring that the provision of information during a transfer pricing audit is carefully managed in each jurisdiction. It would allow to limit risk exposure with other tax authorities in all countries where the associated enterprises have activities.

Transfer Pricing Webinar

Register for our Webinar on 29th January at 10h00 AM to learn more about this recent court case.