- Assistance in preparing and implementing transfer pricing policies
- Assistance on the preparation and implementation of transfer pricing file
- Assistance in Preparing and Submission of Advance Pricing Agreements (“APAs”)
- Assistance during inspections in the field of transfer pricing
- Assistance in fulfilling the country-specific reporting obligations (CbC Reporting)
- Assistance in identifying transfer pricing risk areas as well as assistance in eliminating/streamlining potential exposures
- Organisation of training courses/seminars on transfer pricing
Transfer pricing is a concept applicable to transactions between related parties (members of groups of companies) . The central element of transfer pricing is the principle of market value where prices charged between affiliated entities should not be different from those between independent parties in similar circumstances.
Transfer pricing is a complex subject with a major impact on companies in a group, whether they are groups of local companies or multinational. The complexity of the topic is given on one hand by the continuous development of legislative provisions on transfer pricing, and on the other hand, this topic extends to fiscal, operational and economic issues.
With regard to the impact on companies, in addition to possible fines, an adjustment to transfer prices by tax authorities for non-compliance to the market value principle or if the company fails to demonstrate that the related party transactions were made at market value, may result in significant additional tax liabilities (additional corporate income tax, as well as penalties and interest on late payments).
In addition to significant tax consequences, the possible impact on cash flow, performance indicators, business strategies negatively affects companies.
The Nowium Transfer Pricing Team offers a wide range of transfer pricing services, from planning/documenting transfer pricing files to assistance during transfer pricing audits and resolving disputes with tax authorities.
Our services are tailored to the needs of each company. Depending on internally available resources, Nowium Transfer Pricing Team involvement may range from direct participation in the preparation of transfer pricing documentation to point-specific assistance for your internal teams/specific projects.
Our business card is distributed by our specilised team in transfer pricing area, with extensive experience gained from the many projects in this field that they participated in, the availability of databases dedicated to these types of projects, as well as a large portfolio of clients from different industries and of different size (large market players as well as smaller local companies).
Assistance in preparing and implementing transfer pricing policies
Unlike accounting policies and procedures, transfer pricing policies are not mandatory. However, considering that they involve analysis and having a policy in place prior to conducting transactions between affiliated companies, they can be a useful tool in managing potential transfer pricing risks as well as to ensure consistency in pricing arrangements between a group of companies. In addition, they are the basis for the transfer pricing file (presented below).
The Nowium Transfer Pricing Team can assist you in preparing transfer pricing policies for the main transactions with affiliated companies or for all significant transactions with related parties as well as in implementing these policies.
Assistance on the preparation and implementation of transfer pricing file
Companies carrying out transactions with affiliated entities have the obligation to prepare a transfer pricing file in order to document compliance with the market value principle.
Romanian legislation includes specific provisions on preparation and presentation of a transfer pricing file depending on the category of taxpayer (large, medium and small) as well as the annual value of transactions with affiliated entities above certain materiality thresholds, by transaction category.
In addition, legislation in Romania includes specific provisions concerning items to be included in transfer pricing documentation. Broadly, this include information about the group, about the Romanian entity, and compliance with international provisions (containing elements in Chapter V: Documentation of the OECD Guidelines on transfer pricing for multinational enterprises and tax administrations).
Depending on the client’s specific case, availability of internal resources and existing group-ready materials, the Nowium Transfer Pricing Team can assist you in:
- Analysis of available transfer pricing documentation (prepared at group level or by local team) to determine if it meet local provisions in the field or additional documentation is necessary
- Preparing transfer pricing file
- Guiding internal teams in preparation of transfer pricing file as well as sections of the file that require use of dedicated databases or specialized assistance
- Updating the transfer pricing file from one period to another
Assistance in Preparing and Submission of Advance Pricing Agreements (“APAs”)
Advance Pricing Agreements are a mechanism through which companies may agree on transfer pricing policies with tax authorities in advance.
The procedure for issuing Advance Pricing Agreements is initiated by the taxpayer, it concerns future transactions, but is opposable and binding to the tax authorities if the terms and conditions are fulfilled. In addition, for transactions and periods covered by an Advance Pricing Agreement, the transfer pricing file is no longer prepared and not required by tax authorities.
Through Advance Pricing Agreements, taxpayers take a proactive approach to transfer pricing, avoid any disputes with tax authorities and have more certainty about taxation.
The procedure for obtaining an Advance Pricing Agreement includes several stages (e.g. preliminary discussion with authorities, submission of application for Agreement, issuance of Agreement, annual submission of report on fulfillment of the terms and conditions) .
The Nowium Transfer Pricing team can assist during all these phases (in discussions with the authorities, as well as in the preparation annual reports).
Assistance during inspections in the field of transfer pricing
When ANAF announces an increase in tax audits of transfer pricing, Nowium Transfer Pricing Team can assist you in interacting with authorities during tax audits as well as in addressing possible disputes:
- Assistance and also support in transfer pricing documentation when meeting with authorities
- Preparation of Explanatory Notes with additional information/clarifications requested by tax authorities
- Defend various approaches applied and support client point of view
- Assistance in preparing complaints with technical arguments from relevant legislation
- Preparation of expertise report in transfer pricing (assistance as expert)
- Assistance during arbitration procedures, in collaboration with Nowium legal advisors.
We draw attention to the fact that involving experts in early interactions with authorities may reduce the risk of potential disputes in the field of transfer pricing, avoid time-consuming disputes and ease client staffing requirements.
Assistance in fulfilling the country-specific reporting obligations (CbC Reporting)
Romania has introduced Country-by-Country Reporting obligations by integrating provisions of EU Council Directive 2016/881 of May 25, 2016 into local legislation.
The aforementioned provisions may give rise to notification or reporting obligations for companies resident in Romania and members of a multinational enterprise group.
The Nowium Transfer Pricing Team can assist you in:
- Analyzing your specific case and identifying any notification/reporting obligations
- Preparing and submitting notifications
- Preparing and submitting report for each country (CbC reporting)
- Analyse group-wide strategy for country where the country-specific report is filed and identify potential local risks (the need to report in Romania)
Assistance in identifying transfer pricing risk areas as well as assistance in eliminating/streamlining potential exposures
While identifying transfer pricing risk areas as a result of assistance during any type of project presented above, the Nowium Transfer Pricing also develops proposals and recommendations to eliminate potential exposures.
In addition, we can develop dedicated risk identification projects and potential solutions for their elimination such as:
- Analysis of contracts concluded with affiliated companies and provide comments/recommendations on risk areas identified
- Assistance in identifying potential risks resulting from proposed business restructuring
Organisation of training courses/seminars on transfer pricing
The Nowium Transfer Pricing Team organises transfer pricing seminars aimed at equally familiarizing companies with the terminology and legislation in the field, updating knowledge and training internally-qualified staff.
Transfer pricing events are organised both as part of training sessions on various topical accounting and tax issues, as well as with sessions dedicated to this topic.