Transfer Pricing Agreement Definition

As a result, financial reporting on transfer pricing has strict guidelines and is closely monitored by tax authorities. Complete documentation is often required from auditors and supervisors. If the transfer value is executed incorrectly or inappropriately, the financial statements may need to be reformulated and fees or penalties may be collected. U.S. tax law requires that the foreign assignee/user of intangible assets (patents, procedures, trademarks, know-how, etc.) be deemed to pay a controlling assignor/developer a royalty corresponding to the income from the use of the intangible property. [87] This applies regardless of whether these royalties are actually paid or not. This requirement may result in withholding tax on payments accepted for the use of intangible assets in the United States. In 2002, the European Union established the EU Joint Transfer Pricing Forum. The Communication “Taxation and Development – Cooperation with Developing Countries to Promote Tax Good Governance”, COM (2010) 163 final, stressed the need to support the capacity of developing countries to mobilise domestic resources for development, in line with the principles of tax good governance. .

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