In accordance with the OECD guidelines, Luxembourg tax law and regulations (the “Law”) provide that all intra-group transactions have to adhere to the arm’s length principle, meaning the price which the associated companies would have agreed if they had made a comparable transaction in comparable circumstances on the open market.
The Law also provides for Transfer Prices ("TP") documentation requirement in respect to intragroup transactions and therefore Luxembourg taxpayers shall carefully evaluate and substantiate the pricing of their intragroup activities through proper TP documentation.
As such, transfer pricing documentation is an important risk management tool and is essential to substantiate the arm’s length margin and to manage tax risk.
By using dedicated state of the art IT tools and databases and upon review of the legal documentation related to transactions between related parties, YT Investor Services can provide:
Assessment of the necessary requirements in order to comply with applicable Law concerning TP
Functional analysis while detecting risks assumed and assets used
Determining the “Capital at Risk” as required under applicable Law concerning TP
Selection of a proper transfer pricing method to determine the arm’s length margin
Drafting of a TP report in accordance with relevant regulation and applicable Law
Services addressed to entities that are engaged in intra-group financing transactions.