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Transfer Pricing and Settlement Policy
We provide support in the selection and formal justification of the appropriate transfer pricing method, tailored to the nature of the transaction, the functional profile of the parties, and the specifics of the industry. We prepare transparent pricing calculations and settlement models that comply with the arm’s length principle, align with transfer pricing documentation, and are defensible before tax authorities. The outcome is a clear and robust methodology that provides a solid foundation for both documentation and reporting, as well as day-to-day settlement practices.
Our offer
Our offerings that support the selection and justification of appropriate transfer prices and methods, provide practical calculation tools for intra-group settlements, and ensure reliable analysis of income allocation to foreign permanent establishments (PEs) include:
- Transfer Pricing Workshop
An interactive workshop (online or on-site), during which we work with the client to identify functions, assets, and risks (FAR), select the appropriate transfer pricing method, and define the scope of documentation and required materials. The outcome is a transparent, client-friendly pricing calculation tailored to the client’s functional profile. Optionally, calculation tools can be customised in an MS Excel file.
- Analysis of Method
An analytical service in which we prepare a report identifying the most appropriate transfer pricing method for a given transaction, with a detailed justification. This tool is designed to support the implementation of new operating models and structural reorganisations, or to serve as an appendix to local transfer pricing documentation (Local File).
- Markup Calculation
We develop a model (available as an MS Excel file or web-based version) that enables the calculation of an appropriate markup under the cost-plus or transactional net margin method. The model also handles year-end or balancing adjustments arising from changes in the cost base or allocation keys. It allows for determination of a complete cost base - including factors such as capacity utilisation levels, inefficiency costs, and financing costs - and verification that settlements comply with the arm’s length principle.
- Profit Split Model
We develop a model that supports the application of the Profit Split method through the identification and assessment of the significance of functions, assets, and risks in a transaction, as well as the design of a profit (or revenue) allocation algorithm. This tool is recommended especially for groups of related entities engaging in transactions involving unique intellectual property (IP).
- Branch Income Allocation
We perform an analysis of income attribution to a foreign permanent establishment (PE) in line with the Authorized OECD Approach (AOA). The service includes allocation of functions, assets, and risks to the PE, as well as attribution of income to the branch using appropriate transfer pricing methods.
Tomasz Jankowski
A tax advisor specializing in transfer pricing and corporate income tax. Author of numerous tax commentaries and opinions published in industry publications and expert websites.