An increasing share of current business is carried out by local or multinational groups of companies. Each such group consists of a large or small number of closely cooperating companies. The Czech tax administration is well aware that the prices which those cooperating companies use in their mutual relations do not have to fully reflect common market prices. And the prices that are used within intercompany transactions affect the profits of each company in a group, as well as their tax base.
Transfer pricing has a significant impact on the tax risks of every group, and it applies not only to multinational groups of companies, but local ones as well. If transfer prices are not set properly and transparently, it may lead to disputes with the tax administration and result in double taxation of the same profits, i.e. to a higher tax burden of the group, and costs for related sanctions, imposed by the tax administration. Transfer prices set to low may even lead to a loss of investment incentives.
When carrying out inspections, the Czech tax administration focuses more and more on transfer prices. They allocate major resources to this area. A risk analysis of information gathered from taxpayers helps them focus their inspections on the problematic areas or taxpayers.
- assistance in setting transfer prices
- preparation of comparative studies with the aim of supporting the observance of the Arm's Length Principle (we use local and international databases, for example Amadeus), or updating your current analysis
- preparation of transfer pricing documentation in accordance with the requirements of the Czech tax administration, or review of your existing documentation
- we will prepare an application for binding assessment and help in the following negotiations with the tax administrator
- representation in tax inspections of transfer prices, help with the argumentation before the tax administrator
- we will help you with the consequent adjustment of the tax base in the Czech Republic if your tax base was adjusted abroad due to improper transfer prices