Rules regarding Transfer Pricing

July 14, 2020

Dear Customer,

Kindly be informed that the following regulations are of high importance for the companies having intra-group transactions and for the Tax Authorities (Transfer  Pricing File –TPF –  for the companies carrying out transaction with  affiliates).

TRANSFER PRICING FILE (TPF)

Preparation and presentation of the transfer pricing file.

1. Annual obligation regarding the preparation of the transfer pricing file.

The mandatory preparation derives from the provisions of Order 442/2016, depending on the framing that company, as follows:

For Large taxpayers that perform intra-group transactions greater than or equal to any of the following materiality thresholds:

  • Euro 200,000 – interest cashed or paid related to financial services;
  • Euro 250,000 – transactions regarding the services provided or received;
  • Euro 350,000 – transactions cashed or paid related to tangible/intangible assets;

The file has to be prepared/ready by 25 March each year or in 10 calendar days from the Tax Authorities request.

The aforementioned thresholds are computed by adding up the annual total values of each type of transactions carried out with related parties, excluding VAT.

The deadline for the presentation of the transfer pricing file is of maximum 10 days from the request date, but not earlier than 10 days from the expiration of the preparation deadline.

The presentation of the transfer pricing file will be made at the specific request of the tax authorities either during a fiscal inspection or outside such process.

2. Preparation of the transfer pricing file based on a specific request.

Large taxpayers that perform intra-group transactions under the above thresholds (point a) and the small and medium taxpayers that perform intra-group transactions greater than or equal to any of the following materiality thresholds should submit the TP file at the request of the tax authorities.

  • Euro 50,000 – interest cashed or paid related to financial services;
  • Euro 50,000 – transactions regarding the services provided or received;
  • Euro 100,000 – transactions cashed or paid related to tangible/intangible assets

The aforementioned thresholds are computed by adding up the annual total values for each type of transactions carried out with related parties, excluding VAT.

The file to be submitted only at the request of the Tax Authority or during a tax inspection action; the deadline to be presented to the Authorities is between 30 and 60 calendar days with one exception to delay this with maximum 30 calendar days.

3. Documentation rules for other taxpayers 

The taxpayers performing  intra-group transactions for which the materiality thresholds are lower than those described at points above have the obligation to document the compliance with the arm’s length principle during a fiscal inspection, according to general rules provided by the financial-accounting.

The file can be requested be the Fiscal Authorities to any company having transactions with affiliates, independently to the previous mentioned categories IF the Fiscal Inspectors identify transactions with risk considering their own checking criteria – not being related to the value of each transaction.

The fines for not having the above file, when are requested by the Tax Authorities are between Ron 12.000  and  14.000. Also, please note that in case the TP file is not presented to the tax authorities, they are entitled to make adjustments to the intra-group transactions if the prices do not respect the arm’s length principle.

Our company has the necessary structure in order to offer this service so important for the intra-group transactions.

Reconta Management Group