This thesis is based on the regulations found in the OECD model and the OECD TP guidelines concerning the arm’s length principle. The core of the arm’s length principle is that transactions between associated enterprises should be treated the same as transactions between independent enterprises. This principle can be found in Article 9 of the OECD model. One transaction that may fall within the scope of Article 9 of the OECD model is business restructuring. Business restructuring was previously an unregulated TP area but with the new OECD TP guidelines, from 2010, regulations have been formulated. The aim with thesis is therefore to examine how the arm’s length principle should be applied to the new guidelines for business restructurings of intangibles with an uncertain value at the time of the restructuring. In order to answer the question set out in this thesis some of the factors that affect the application of the arm’s length principle have been examined separately. Firstly the arm’s length principle that is the generally accepted TP method used by both taxpayers and tax administrations in order to find a fair price for transactions between associated enterprises. The principle seeks to identify the controlled transaction and thereafter find a comparable uncontrolled transaction that is similar to the transaction performed between the associated enterprises. The second part examined the meaning of the term business restructuring according to the new guidelines since there is no other legal or general definition. Business restructurings are defined as cross-border redeployments of functions assets and risks, performed by MNEs. As long as a transaction falls within this definition it will be subjected to the arm’s length principle for tax purposes. The third part examined intangibles since that also lack a general definition. The identification and valuation of intangibles is a complex and uncertain thing to do for both taxpayers and tax administrations. When applying the arm’s length principle it is however found that the issue of identification of what constitutes and intangible may be unnecessary. The aspect that should be considered is instead the value of the intangible or more precise, the value that independent enterprises would have agreed upon in a similar situation. The applicability of the arm’s length principle to business restructurings of intangibles with an uncertain value at the time of the restructuring should be found by performing a comparability analysis. In order to perform a comparability analysis, the controlled transaction firstly has to be identified. Thereafter, a comparable uncontrolled transaction needs to be found. An equivalent uncontrolled transaction may not be found in all cases and it should in those cases be examined what independent enterprises would have done if they had been in a comparable situation. The arm’s length principle should be applied to business restructurings of intangibles with an uncertain value in the same manner as for any other uncontrolled transaction. The issues for this type of a transaction become the identification of what constitutes a business restructuring and also how to determine a fair value for the intangibles. The OECD TP guidelines lack some guidance as to the issues that can occur when a comparable uncontrolled transaction cannot be found. This creates an unsatisfactory guesswork for both taxpayers and tax administrations when trying to determine what independent enterprises would have done if they had been in a similar situation. This creates an unnecessary uncertainty when trying to apply the arm’s length principle.

<p><strong>Purpose:</strong> The overall purpose of this thesis is to provide an analysis of the effects of the documentation requirements on transfer pricing and provide a clearer picture of the documentation requirements in transfer pricing. Furthermore, the purpose is to analyze whether the chosen method of Superfos is adequate related to the new regulations.</p><p><strong>Background:</strong> In 2007, new regulations concerning the documentation of transfer pricing was enacted in Swedish law based on OECD guidelines. This change has led to new internal guidelines for companies regarding their transfer pricing work since the requirements apply to both Swedish owned companies and foreign owned companies. Furthermore, with this change, a great uncertainty about the requirements is shared by companies.</p><p><strong>Method:</strong> This thesis has been conducted as a qualitative case study with Superfos as the case company. A deductive approach has been used and the collection of data consists of both primary and secondary data. Primary in the form of an interview with the finance manager at Superfos and secondary through the use of the Swedish tax authority's stated guidelines concerning transfer pricing as well as books, journals and databases.</p><p><strong>Conclusion: </strong>In the conclusion we present a clarifying model of the documentation in transfer pricing based on the data collected for this thesis. In six steps, a clarifying picture of the overview, company structure, transactions identification, functional analysis, comparability analysis and results is provided.</p>

This paper aims at providing a comprehensive overview of existing literature on the topic of comparability adjustments. Based on existing literature the most commonly used adjustments can be categorized in two broad categories: "accounting and financial risks adjustments" and "strategic/market adjustments". With the exception of working capital adjustments, the lack of guidance and recognized standardized application will quite possibly lead to continued discrepancies in their use. Taxpayers continue to struggle with the immense amount of documentation as well as justification requirements when it comes to adjustments, as there is no clear path to follow and very few practical application examples, which would unify the application of adjustments. As seen, even though the topic of comparability adjustments has been around since before the first version of the OECD TP Guidelines, the topic is yet to be fully explored in both official guidance as well as literature, research and especially practical tools. / Series: WU International Taxation Research Paper Series

The problematics of transfer pricing in Czech and International tax law Constant globalization leads to the boom of business and property-related companies, which we call multinational. Multinational companies carry out so-called intra-company transactions within their group of companies under different conditions than they would in normal business. We call these transactions dependent, because they are carried out between affiliates, in an environment that is not competitive but related. Transfer pricing issues are usually associated with tax optimization because, with the help of these transactions, multinationals are able to achieve a lower tax burden. Aggressive tax optimization prevents proper transfer pricing for intra-company transactions. Transfer pricing of intra-company transactions is set up properly if they are in line with the arm length's principle, which in its own way attempts to simulate a competitive environment. The aim of this work is to outline the regulation of transfer pricing in Czech and International tax law and to analyse the problems of the regulation. In Czech law, the transfer pricing is mainly regulated in the Income Tax Act and in the non-binding instructions of the Ministry of Finance, which rely heavily on international regulation. At international level, the...

Purpose: The overall purpose of this thesis is to provide an analysis of the effects of the documentation requirements on transfer pricing and provide a clearer picture of the documentation requirements in transfer pricing. Furthermore, the purpose is to analyze whether the chosen method of Superfos is adequate related to the new regulations. Background: In 2007, new regulations concerning the documentation of transfer pricing was enacted in Swedish law based on OECD guidelines. This change has led to new internal guidelines for companies regarding their transfer pricing work since the requirements apply to both Swedish owned companies and foreign owned companies. Furthermore, with this change, a great uncertainty about the requirements is shared by companies. Method: This thesis has been conducted as a qualitative case study with Superfos as the case company. A deductive approach has been used and the collection of data consists of both primary and secondary data. Primary in the form of an interview with the finance manager at Superfos and secondary through the use of the Swedish tax authority's stated guidelines concerning transfer pricing as well as books, journals and databases. Conclusion: In the conclusion we present a clarifying model of the documentation in transfer pricing based on the data collected for this thesis. In six steps, a clarifying picture of the overview, company structure, transactions identification, functional analysis, comparability analysis and results is provided.

Transfer pricing (TP) has for a long time been an important tax issue, however it is only within the past decade that it has gotten the attention it deserves. This since more and more corporations becomes globalized. When setting a TP within a multinational enterprise (MNE) it is important to consider the arm’s length principle. The reason for this is that all countries, involved in an internal transaction, are entitled to their fair share of tax revenues. The principle implies that when performing a transaction within a MNE, the price used shall be set on the same circumstances as if the transaction was performed between independent actors. Corporations which do not set their TPs in accordance with the arm’s length principle face the risk of adjustments and future audits. Setting a TP, which is in line with the arm’s length principle is, however, not an easy task, therefore the subject of advance pricing agreement (APA) has emerged. APA has existed since the middle of the 1980’s when it was first implemented in Japan. However, it was as recent as last year, 1st of January 2010, that a legislation concerning APA was implemented in Swedish tax legislation. The legislation implies that corporations which are a part of a MNE can apply for a binding agreement at the Swedish tax authority regarding future TP. This opportunity will provide for a foreseeable tax future. Due to this recent implementation of APA legislation in Sweden, we have chosen to conduct a cross-country analysis concerning regulations of APA, using countries which have had APA legislation for a substantial amount of time. The different countries which legislations we have studied in this thesis are Germany, the Netherlands, Sweden and the U.S. The purpose with this thesis is to examine if the Swedish legislation concerning APA will provide any advantages for Swedish MNEs. A qualitative research method with the focus on an abductive research approach has been used for this thesis. The abductive approach consists of both deductive and inductive research approaches. The deductive approach is used to answer our research questions and the inductive approach is used to answer the purpose with our thesis. The purpose of this thesis consists of two research questions, what the Swedish APA legislation implies and are there any differences between the Swedish APA legislation and other countries’ APA legislations. After analyzing this new Swedish legislation and performing the cross-country analysis we have come to the conclusion that in general APAs provides substantial benefits for Swedish corporations. With the main advantages being the increased predictability and the reduced administrative burden concerning TP issues. In order for the Swedish legislation to be fully beneficial for the corporations it is, however, in need of some adjustments. If adjustments to the legislation are made we conclude that APAs will only provide benefits for Swedish corporations.

This master thesis examines the issues surrounding the pricing of intra-group loans. The main focus of the thesis is the process of establishing an interest rate and the assessment of the credit risk in an intra-group context.  In order to expose the common problems associated with the pricing of intra-group loans the thesis has examined case law from two different jurisdictions, Canada and Sweden, which have been put in relation to the OECD guidelines and Swedish national legislation. The purpose of the master thesis has been to determine whether the establishing of an interest rate and the assessment of the credit risk of an intra-group loan should be made taking into account the parent-subsidiary affiliation or relationship and whether or not this is a deviation of the arm’s length principle. A general assumption is that, if a transaction is carried out between related parties, the price could be different from a price deriving from negotiations between two unrelated parties on the open market, due to their commercial or financial relations. A common feature in case law, regarding the establishing of an appropriate interest rate on intra-group loan, has been whether or not the parent-subsidiary should be included in the assessment of the credit risk. Much of the support available to taxpayers in resolving transfer pricing issues are relating to goods and services and not financing transactions. The main reason is the unique economic profile of financial transactions. Financial transactions are affected by different factors why it is difficult to develop usable transfer pricing policies. Establishing economically justifiable transfer pricing policies while attempting to properly reflect taxable income and prevent penalties from international tax authorities, has resulted in transfer pricing challenges that are unique to intra-group financing. According to Swedish law, interest is regarded as a deductable cost within corporate tax. However, in recent cases, the Swedish tax authorities have been questioning, the deduction right as well as the level of interest on intra-group loans. As of today, there are few national and international guidelines on this area thus it is of interest to examine and address the issues surrounding intra –group loans.

Transfer pricing Abstract The thesis focuses on transfer pricing which falls within a scope of international taxation. The aim of the theses is to define transfer pricing, describe transfer pricing rules and to assess these rules. The first part of the theses focuses on international taxation, especially BEPS. Double tax treaties and ATAD directive are further described. The second part of the diploma theses focuses on transfer pricing from international perspective. Transfer prices are prices agreed between associated enterprises. The fundamental concept of transfer pricing is arm's length principle. The prices agreed between associated enterprises should equal to prices which would have been agreed between independent parties. The arm's length principle is included within the double tax treaties. The theses further focuses on OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, especially comparability analysis and transfer pricing methods, which are used for setting up of transfer prices. The third part of the theses focuses on transfer pricing rules from the Czech perspective. The respective rules are included within the Income Taxes Act and legally non-binding guidance, which follow the international rules. The Czech Tax Authorities increase their attention on...

Disertacijoje nagrinėjami sandorių kainodaros teisinio reguliavimo ypatumai Lietuvoje ypatingą dėmesį kreipiant į tarptautinių organizacijų (Ekonominio bendradarbiavimo ir plėtros organizacijos (EBPO) ir Europos Sąjungos) rekomendacijų įtaką jam. Pirmoje disertacijos dalyje pateikiama sandorių kainodaros samprata, sandorių kainodaros reguliavimo raida Lietuvoje ir EBPO bei Europos Sąjungos lygmeniu, tiriama tarptautinių organizacijų rekomendacijų reikšmė sandorių kainodaros reguliavimui, nagrinėjamas EBPO pavyzdinės mokesčių konvencijos dėl pajamų ir kapitalo 9 straipsnis ir jo pagrindu priimtos Lietuvos teisės normos. Ši dalis baigiama „ištiestosios rankos“ principu pagrįstos sandorių kainodaros kritika ir perspektyvomis. Antroje dalyje, skirtoje bendrosioms sandorių kainodaros praktinio taikymo nuostatoms Lietuvoje ir EBPO bei Europos Sąjungos rekomendacijų įtakai joms, tiriama palyginamumo analizė, sandorių kainodaros metodai ir jų parinkimas ir sandorių kainodaros dokumentavimo reikalavimai. Trečioje dalyje analizuojamos tarptautinės ginčų sandorių kainodaros srityje nagrinėjimo galimybės ir jų prevencija tiriant abipusio susitarimo procedūrą pagal minėtą pavyzdinę konvenciją ir sutartis dėl dvigubo apmokestinimo išvengimo, ginčų šioje srityje nagrinėjimą pagal 1990 m. liepos 23 d. Konvenciją 90/436/EEB dėl dvigubo apmokestinimo išvengimo koreguojant asocijuotų įmonių pelną ir šių ginčų prevenciją išankstiniais kainodaros susitarimais. / In the dissertation there are analyzed peculiarities of transfer pricing legal regulation in Lithuania paying a special attention to the influence of international organizations‘ (Organisation for Economic Co-operation and Development (OECD) and European Union) on it. In the first part there are submitted the concept of transfer pricing, the history of transfer pricing regulation in Lithuania and at the level of OECD and the European Union, there are analyzed impact of recommendations of international organizations to the transfer pricing regulation and Article 9 of OECD Model Tax Convention on Income and on Capital and Lithuanian legal provisions adopted basing on this Article. This part is ended by presenting the critics of transfer pricing, based on arm’s length principle, and the perspectives of it. In the second part, which is dedicated to the general provisions of Lithuanian transfer pricing implementation practical issues with regard to the OECD and European Union recommendations, there are examined comparability analysis, transfer pricing methods and the selection of them, as well as transfer pricing documentation requirements. In the third part there are analyzed the legal regulation of the possibilities of international disputes on transfer pricing resolution and their prevention by examining the mutual agreement procedure under the mentioned Model Convention and conventions of double taxation, resolution of disputes according to Convention 90/436/EEC on the... [to full text]

Disertacijoje nagrinėjami sandorių kainodaros teisinio reguliavimo ypatumai Lietuvoje ypatingą dėmesį kreipiant į tarptautinių organizacijų (Ekonominio bendradarbiavimo ir plėtros organizacijos (EBPO) ir Europos Sąjungos) rekomendacijų įtaką jam. Pirmoje disertacijos dalyje pateikiama sandorių kainodaros samprata, sandorių kainodaros reguliavimo raida Lietuvoje ir EBPO bei Europos Sąjungos lygmeniu, tiriama tarptautinių organizacijų rekomendacijų reikšmė sandorių kainodaros reguliavimui, nagrinėjamas EBPO pavyzdinės mokesčių konvencijos dėl pajamų ir kapitalo 9 straipsnis ir jo pagrindu priimtos Lietuvos teisės normos. Ši dalis baigiama „ištiestosios rankos“ principu pagrįstos sandorių kainodaros kritika ir perspektyvomis. Antroje dalyje, skirtoje bendrosioms sandorių kainodaros praktinio taikymo nuostatoms Lietuvoje ir EBPO bei Europos Sąjungos rekomendacijų įtakai joms, tiriama palyginamumo analizė, sandorių kainodaros metodai ir jų parinkimas ir sandorių kainodaros dokumentavimo reikalavimai. Trečioje dalyje analizuojamos tarptautinės ginčų sandorių kainodaros srityje nagrinėjimo galimybės ir jų prevencija tiriant abipusio susitarimo procedūrą pagal minėtą pavyzdinę konvenciją ir sutartis dėl dvigubo apmokestinimo išvengimo, ginčų šioje srityje nagrinėjimą pagal 1990 m. liepos 23 d. Konvenciją 90/436/EEB dėl dvigubo apmokestinimo išvengimo koreguojant asocijuotų įmonių pelną ir šių ginčų prevenciją išankstiniais kainodaros susitarimais. / In the dissertation there are analyzed peculiarities of transfer pricing legal regulation in Lithuania paying a special attention to the influence of international organizations‘ (Organisation for Economic Co-operation and Development (OECD) and European Union) on it. In the first part there are submitted the concept of transfer pricing, the history of transfer pricing regulation in Lithuania and at the level of OECD and the European Union, there are analyzed impact of recommendations of international organizations to the transfer pricing regulation and Article 9 of OECD Model Tax Convention on Income and on Capital and Lithuanian legal provisions adopted basing on this Article. This part is ended by presenting the critics of transfer pricing, based on arm’s length principle, and the perspectives of it. In the second part, which is dedicated to the general provisions of Lithuanian transfer pricing implementation practical issues with regard to the OECD and European Union recommendations, there are examined comparability analysis, transfer pricing methods and the selection of them, as well as transfer pricing documentation requirements. In the third part there are analyzed the legal regulation of the possibilities of international disputes on transfer pricing resolution and their prevention by examining the mutual agreement procedure under the mentioned Model Convention and conventions of double taxation, resolution of disputes according to Convention 90/436/EEC on the... [to full text]