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Documentation
In practice, a "Master File" approach has proven to be a valid alternative to dealing with documentation on country-by-country basis.
The Transfer Pricing Process allows you for example to resolve the following documentation issues:
- How to deal with the different detail levels of documentation required by the different tax authorities?
- How to avoid duplication of documents in various countries, with the danger of inconsistencies which could put you at a disadvantage when double taxation has to be resolved in mutual agreements or under the EU Arbitration Convention with the involvement of multiple tax authorities?
- How to manage the "paper and audit trails" resulting from transfer pricing documentation on a pan-European basis?
- How to benchmark the remuneration - i.e. the allocation of the operating results between the group entities - using pan-European benchmarks?
- How to manage in a cost-efficient way the process to gather the relevant data regarding cost charges for centralized activities to the effective users?
- Can you use generic economic indicators regarding what profit mark-up to use on top of the cost charges in Europe, which are acceptable to tax authorities around Europe?
- Would it be possible to support one consistent royalty rate for the use of brand name and logo for the whole of Europe?
- How to document inter-company transactions for transfer pricing which are subject to foreign withholding taxes?
- What is your storyline in case you have operations in countries applying transfer pricing rules and regulations not in line with the OECD Transfer Pricing Guidelines?
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