At the end of 2022, we recommend that you take a timely look at your transfer pricing landscape in order to initiate any measures for the current year or, if necessary, initiate adjustments for the coming year 2023.

2022 is the third year in a row characterised by extraordinary developments: the war in Ukraine, energy prices, material shortages and ongoing Covid 19, as well as interest rate jumps, inflation and currency developments. All of these factors will once again have a direct impact on your tax, customs and transfer pricing environment in 2022. These are, for example:

    (1) Company-specific matters

such as reviewing the EBIT margins of (sales) companies or profit mark-ups actually achieved for production or service transactions. Are these synchronised with the value added contributions made? These findings may require adjustments or influence the determination of I/C transfer prices or target margins in the budget calculations for 2023. Or do the contents of your intercompany agreements still match the actual implementation?

    (2) Updating transfer pricing documentation and database studies

The OECD recommends that transfer pricing documentation and database studies be regularly reviewed and updated. Functional, risk and economic analyses should be updated annually, database studies every three years and financial data annually.

Database results can be used not only ex-post for documentation purposes, but also ex-ante for planning purposes. This is an opportunity to compare the TP policy for 2022 with the current course of the year, to discuss whether, for example, the earnings situation of local companies corresponds to this or whether possible adjustments at the end of the year make sense, taking into account customs and VAT issues.

    (3) Current international developments

such as local legal changes, case law, administrative directives or design considerations. Timely information, examination and anticipation of such changes may have a direct impact on your planning for 2023.

To help you deal with these questions safely, we offer you our Transfer pricing check 2022/2023 in which we jointly review and plan unusual business transactions, I/C contracts, the scope and timing of documentation preparation for 2022 or any permanent establishment issues in a structured manner.

Please contact us if you are interested!

Carsten Schmid

Transfer Pricing & Friends GmbH, Stuttgart