Transfer Pricing study
Worldwide leader in the segment of high added value services for operators within the telecommunication industry, operating in the main countries all over EU, Latin America and Middle East.
The Group, following the decision to directly control the main international markets through its-own subsidiaries and the subsequent growing of the commercial intercompany relationships, asked VVA to work out a Transfer Pricing Study in order to determine the correct market value of the remunerations to be used within the above mentioned intercompany transactions.
Intercompany transfer pricing theme gained over the last decade a growing interest in the international economic environment due to organizational / managerial reasons, in brief related to models of recognition and evaluation of the performances among companies of the same multinational enterprises (MNEs), and, from the other side, to the governance of the delicate relationships that MNEs hold with the various Tax Authorities of the countries in which they operate.
Within the present Case History, VVA applied its-own methodology in the field of transfer pricing in favour of an international leading Group in the segment of high added value services for operators within the telecommunication industry.
Following a consolidated VVA methodology, the Transfer Pricing Study was performed through three main phases:
- Phase 1 – Group description, in terms of business areas covered, products / services offered, controlled companies and relating functional analysis, examination of the main intercompany agreements, Group’s supply chain analysis and subsequent identification of the relevant transactions to the end of the study
- Phase 2 – Selection of the most appropriate method, among those recognized by OECD and Italian Tax Authority for the determination of the intercompany transfer prices, based on the functional and risk profile of the Group’s companies, drawn in the previous Phase 1
Quanti - qualitative analysis aiming to identify, through a progressive selection process, a set of comparable companies, in terms of functional and risk profile, and to determine consequently the arm’s length remunerations obtained by the same comparables for the activities performed.
The Transfer Pricing Study was concluded through the identification of a market values range within which the Group may determine the arm’s length remunerations to be paid for the current intercompany transactions.