Transfer pricing

 

Transactions within multinational companies are becoming increasingly important in business worldwide. All transactions among related parties are influenced by the Czech legal framework and, for tax purposes, prices agreed between related parties have to meet the definition of arm’s length principle. The consequences of an incorrect transfer pricing set-up can be additional tax assessment, penalties and interest on late payment. In the case of companies receiving investment incentives, having an incorrect transfer pricing set-up can even cause potential loss of these investments.

The establishment of the Specialised Financial Office in 2012, the mandatory disclosure of transactions with related parties for the year 2014 and thereafter in the corporate income tax return and the introduction of field investigations in order to collect information, all of these 3 things (acts from the tax authorities‘ side) are evidence that the Czech tax administration recognises the importance of transfer pricing. As a result, the number of tax audits that focus on related party transactions has increased recently, particularly those involving services, low-risk functions, and losses.


Transfer pricing services

Our team in the Czech Republic focuses on Czech and international taxation. Our experts in the field of transfer pricing have the knowledge of local specifics and many years of extensive experience gained abroad. Due to the global PwC network, we can get support from our colleagues from foreign PwC offices. We provide, among others, the following transfer pricing services:

  • Assistance in preparing transfer pricing documentation;
  • Assistance in preparing and negotiating Advance Pricing Agreements (“APAs”);
  • Assistance in preparing benchmarking studies;
  • Assistance in preparing expert valuations in the transfer pricing area;
  • Assistance with value-chain transformation (i.e. group or transactions restructuring);
  • Advice on planning and developing local and regional transfer pricing policies;
  • Review of existing or planned related party transactions from the perspective of compliance with the arm´s length principle;
  • Review of compliance with local investment incentives and price regulations;
  • Assistance in reviewing inter-company agreements from the tax perspective;
  • Assistance during transfer pricing audits conducted by the Tax Authorities;
  • Assistance with the assessment of impacts of the OECD Action plan regarding the Base Erosion and Profit Shifting (“BEPS”);
  • Preparation of the transfer pricing disclosure;
  • Basic risk assessments;
  • Detailed review of transfer pricing;
  • Simulation of tax audit in the area of transfer pricing.

 

Contacts

David Borkovec

Lead Partner, Tax and Legal Services, PwC Czech Republic

Tel: +420 251 152 561

Natalia Pryhoda

Tax and Legal Services, PwC Czech Republic

Tel: +420 251 152 647

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