International Transfer Pricing Issues Related to Taxation of Intra-Group Service Transactions; Deductibility and Arm's Length Pricing of Service Fees

The research studies international transfer pricing issues related to taxation of inter- group service transactions in the Unites States, Germany, Sweden and Finland. Also the OECD Transfer Pricing Guidelines (1995) are used in comparison because all countries studied are OECD members. The United States and Germany have guidelines for transfer pricing but Finland and Sweden do not have but they do they follow the OECD guidelines. The main research issues are deductibility and arm’s lengths pricing of service fees. Transfer pricing of intra-group service transactions should follow the arm’s length principle, which means that the pricing of service transactions should be similar to pricing of similar transactions in comparable circumstances between independent parties. In other words two enterprises which are members of an international group should charge a payment from a given inter-group service and they should also pay for inter-group services when an independent party would in comparable circumstances collect a payment from similar services offered or pay for similar services received. Legislation of different countries defines different kind of pricing methods. In principal direct transfer pricing methods as a comparable uncontrolled price method, a resale price method and a cost plus method should be used. When pricing intra-group service transactions the use of direct methods will be quite complicated because usually comparable transactions do not exist between unrelated parties and often services are not resold. In pricing intra-group service transactions the use of indirect transfer pricing methods, in other words cost allocation methods is more suitable. The documentation requirements related to transfer pricing issues in the countries studied are introduced briefly. Also main points of other issues related to transfer pricing of an international group such as advance pricing agreements, quittance possibilities, safe harbor rules, contra corrections and simultaneous tax examinations are studied.fi=Kokotekstiversiota ei ole saatavissa.|en=Fulltext not available.|sv=Fulltext ej tillgänglig