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Kompetenzen | LKC International

Competences

Our consulting approach comprehensively supports our clients on all issues related to planning, implementation, documentation as well as the operational management of the transfer prices. Our highest tax goal is the creation of a consistent, “external audit-proof” transfer price system and transfer price documentation. Beyond the adherence to legal directives, our focus is also on the integration of the controlling and company steering requirements into transfer pricing. A transfer price system which is tailored on the normative level to the company goals and the company steering requirements generates added value which exceeds mere compliance.

In order to do this, the consultant must be able to think outside the box in his technical area. In collaboration with our cooperation partners, we must be able to guarantee the provision of IT-supported tools for the transfer price management and its connection to the ERP environment beyond the tax law and economic side of transfer price consulting. This is our comprehensive consulting approach.

The careful analysis of functions, risks and the deployed assets as well as the planning which is based upon a fundamental understanding of the value-creation processes is the foundation of an optimal transfer price system.

  • Analysis of the existing transfer price systems with regards to compliance and the tax risks, both domestically and abroad
  • Tax assessments of transfer price issues with regards to the fulfilment of the requirements of the arm’s-length principle
  • Value-creation analyses upon the company and group levels
  • Development and modification of the transfer price systems in order to avoid double taxation and other tax risks
  • Adaptation of the transfer price systems to the requirements of the cost and performance accounting system as well as the in-house incentive systems
  • Financial model for the analysis of the tax-optimised financial results allocations as well as the decision-making basis for restructurings
  • Analysis of transfer price systems for company acquisitions and company mergers
  • Conducting economic analyses in order to determine the customary arm’s length transfer prices
  • Analysis of the implications of the country-by-country reporting for the group-wide financial results allocation and risk position
  • BEPS-readiness check of existing group company structures–particularly also with regards to production site risks and intangible assets
  • Cost-centre analysis and reorganisation in order to delimit specific cross-border transactions (e.g. headquarters’ services, Project Cost Centres)
  • Development of business management key indicator systems in order to adapt the controlling and compliance requirements to the transfer price directives
  • IT-supported models for the allocation of specific performance relationships (e.g. service billing, introduction of ERP systems)
  • Conducting database studies in the areas of sales, manufacturing, development, transfer of use to intangible assets and financing
  • Valuation of individual intangible assets (e.g. trademarks, patents, customer portfolios, know-how) and aggregated assets (e.g. as the result of relocations of functions)
  • Development of cost-sharing arrangements for the group-wide, cross-border cooperation on development projects
  • Implementation of advance pricing agreements as well as obtaining binding information

The central goal of the transfer price documentation is to provide the documentation of the adherence to the arm’s-length principle for all group-internal supplier and service relationships. In this regard, the aspects of the group-wide, content-related consistency and the cost efficiency with regards to internal and external resources must be taken into consideration. The initiatives developed by the EU as well as also the OECD for the purpose of globally-standardised documentation promote the efficient, centralised and IT-supported drafting of global documentation based upon the master file/local file approach. Through our cooperation partners, we have access to specialised IT tools for the efficient drafting of global documentation.

  • Technical review of existing transfer price documentation with regards to consistency and risk position
  • Drafting and updating global transfer price documentation for on-going transactions in accordance with national and international guidelines (master file/local file approach in accordance with OECD BEPS Action Item 13)
  • Drafting and updating transfer price documentation for extraordinary business events (relocations of functions) incl. the valuation of transfer packages
  • Implementation of the OECD guidelines for the purpose of country-by-country reporting including analysis in order to identify potential transfer price risks
  • Providing support during the collection of documentation-relevant data (e.g. transaction volumes, price comparison data)
  • Conducting and updating database studies in the areas of the development, manufacturing, sales, transfer of use to intangible assets and financing
  • Documentation of the group company agreements and analysis of the agreements from the German tax perspective as well as from the OECD perspective
  • Examination of existing transfer price documentation with regards to completeness and the fulfilment of the statutory requirements (protection from the reverse onus of the burden of proof, income tax corrections and criminal tax law consequences)
  • Coaching on the in-house drafting of transfer price documentation

The global fight of the various countries’ Tax Offices over the allocation of the tax income and the constant tightening of the transfer price regulations of the many countries over the past decades have resulted in the fact that above all historically-evolving transfer price systems are being subjected to a critical assessment through external audits. A competent defence ensures the avoidance of detrimental tax consequences as the result of one-sided income corrections. In this regard, beyond the mere technical discussion with the External Auditor, the consultant must be able to conduct both national legal redress procedures as well as also initiate and support bilateral mutual agreement procedures.

  • Supporting and coordinating external audits
  • Defence of clients’ positions in dealings with national and foreign Federal Tax Offices
  • Tax assessment of transfer price issues with regards to the fulfilment of the requirements of the arm’s-length principle
  • Conducting opposition and court procedures regarding transfer price issues
  • Conducting mutual agreement procedures after income corrections have been made during the external audits
  • Implementation of unilateral measures in order to avoid double taxation as the result of external audits

Even a transfer price system that has been set up based upon well-founded analysis and valid planning can reveal its tax and operational benefits only then if the implementation and the operational management of the group-internal supplier and service streams in the daily business are undertaken in an effective and efficient manner. We possess comprehensive experience in the introduction as well as modification of transfer price systems, the deployment of IT tools for the implementation of transfer price systems as well as the definition of workflows for the operational TP management. In this regard, we can also rely on our cooperation partners’ comprehensive know-how for the connection of the IT tools to the ERP systems for the purposes of TP management.

  • Drafting transfer price guidelines for the group-internal determination of the transaction-related approach during the setting of transfer prices
  • Definition of workflows for the coordination of the company divisions (Taxation, Operations, Controlling, Legal, HR, Sales, R&D, etc.) during the implementation and management of transfer price systems
  • Adaptation of reporting systems with regards to the double benefit for company steering, incentive systems and transfer prices
  • Development of financing models in order to calculate the on-going and one-time transfer price adjustments
  • Adaptation of the key indicator systems for company steering and incentivisation in order to reconcile operational and tax goals
  • Segmentation of the income statement for multi-functional group companies
  • IT-supported monitoring of the financial results allocation within the group for profit-based transfer price systems (margin management)