Promoting Voluntary Tax Compliance as a Common Priority of Slovakia and the EU , Hotel Bôrik

 Recent works of the OECD and the EU Joint Transfer Pricing Forum (JTPF) have established that the successful resolution of Transfer Pricing disputes rely on:  Developing a targeted knowledge strategy  Systematic use of appropriate techniques and methodologies  Identifying Best practices and adopting good governance process EU JTPF – October Transfer Pricing Risk management : _en.pdf _en.pdf EU JTPF – June 2012 – Discussion Paper on further Work in the Area of Transfer Pricing Risk assessment: _en.pdf OECD Draft Handbook on Transfer Pricing Risk assessment (April 2013): Handbook-TP-Risk-Assessment-ENG.pdf OECD – Dealing Effectively with the Challenges of Transfer Pricing :

 Finite Resources for the Tax Administration to balance with complex issues and significant Tax Base erosion risks  An effective and efficient management of transfer pricing cases meets the common interest of Taxpayers and Tax Administration: key for a successful outcome for the Tax Administration and legal certainty/possible neutralization of the tax assessment for the Taxpayers

 Risk assessment and risk management:  Risk factors and quantification  Recurring transactions  Large & complex « one time » transactions  Risk indicators  Profitability  Transactions with related Parties in low-tax jurisdictions  Intra-group service transaction  Marketing or procurement companies abroad  Excessive debt/interest expenses  Transfer or use of intangibles to a related Party  CCA  Business restructurings  Sources of information: contemporaneous TP documentation, Questionnaires, Information returns, Public data and registers  Governance tools: Risk assessment process and Risk assessment reports

 Conducting the audit:  Follow-up of pre-audit phase: Case selection and selection of fields with high reassessment probability  Assessment of the quality of the transfer pricing documentation  Function & risk matrix analysis  Value chain  Segment-analysis  Interviews

Source: UN - Eighth Session of the Committee of Experts on International Cooperation in Tax Matters 15–19 October 2012, Geneva

Source: UN - Eighth Session of the Committee of Experts on International Cooperation in Tax Matters 15–19 October 2012, Geneva

Source: UN - Eighth Session of the Committee of Experts on International Cooperation in Tax Matters 15–19 October 2012, Geneva

Source: Deloitte Germany 2010

 Advance Price Agreements (APAs)  Alternative administrative procedures, e.g. Safe harbors  « Enhanced engagement approach »: the UK and Netherlands examples

Source: HMRC site - International Manual at INTM et seq.

Source: HM Site – Horizontal monitoring within the Medium to Very Large Business Segment ng.pdf

 Observation: overall effect of BEPS structures is to associate more profit with legal constructs and intangible rights and to shift risk intra-group, reducing share of profit associated with substantive operations  Improvements or clarifications to transfer pricing rules to address specific areas where current rules produce « undesirable results from a policy perspective »  Current project on intangibles  Simplified appication of the TP guidelines  Documentation requirements  Measures in relation to the shifting of risks and intangibles, the artificial splitting of ownership of assets between legal entities: Germany and Sweden examples See Business restructurings and Transfer Pricing in Sweden and Germany hj.diva- portal.org/smash/get/diva2:159038/FULLTEXT01 - Företagsomstruktureringar och internprissättning i Tyskland och Sverige

Event characterizing a "Relocation of functions" ( §1 of the Decree Law FVerIV) Yes General TP principles apply TaxPayer prove that no Essential Intangible asset & advantages are transferred or that individual prices complies with the overall value Package deal assumed – Transfer Package valuation required Available Comparables for the transfer package as a whole? Taxpayer has to determine the range of agreement based on the profit expectations of both parties Most reliable price in the range as substantiated by Tax Payer, otherwise mean value No General TP principles apply Yes Evidence that "Overall result of individual prices = value of the package as a whole"? Base the Transfer Package valuation on comparables If no adjustment clause has been agreed upon, the provision on assuming such clause apply. Assumption can be refuted by Tax payer Yes No Yes Relocation of Functions (sec. 1 par 3 sentences 9-10 FTA) Source: Germany's Transfer Pricing Provisions;: A conflict with Internationally Agreed Principles? Hartmut Förster Tax Management Jan. 28, 2010

 EU approach: exchange of information, simultaneous audits  The examples of BRICs and Australia

 How to adjust and adopt a consistent approach in terms of penalties  How to manage double taxation issues

Thank you for your attention ! Name: Morgan Guillou Contact: