ESG & transfer pricing in the supply chain

Supply chains are under the microscope. The Supply Chain Duy Care law, the Corona pandemic, sustainability - there are many different reasons for companies for carrying out an internal review of their supply chains and adjusting them where necessary. The current trend is a shift to more local and more flexible supply chains that continue to be viable even in a crisis situation. This has an impact on transfer pricing, because every investment and every adjustment within the value chain, such as shifting a location or changing a supplier, may also have to be reflected in the transfer pricing model. There may be risks from a transfer pricing perspective, but also offers opportunities.

In the course of the increasing sustainability efforts of many companies, topics such as more sustainable production, insourcing of production steps or social engagement at production sites are also on the agenda. These activities reinforce efforts to build up “green branding”. Although when transfer pricing is involved they rapidly lead to discussions of assessing, valuing and recharging (new) intangible value. The German tax authorities are currently looking ever more closely into the recharging of intangible assets in particular as part of tax audits.

Changes in the configuration of the supply chain generally also have further tax implications, for example, on indirect taxes and customs duties, that need to be included in budgeting and planning.

Our interdisciplinary team can assist you with advice on tax issues when you reconfigure your supply chain to match your sustainability strategy. When doing this, we take both transfer prices and indirect taxes (environmental taxes and customs duties) into account when seeking more sustainability in your value chain.

Our methodology: 

Analysis of the existing transfer pricing model

Calculation and explanation of the available room for improvement, especially in terms of economic and sustainability criteria

Development and definition of the future transfer pricing model

Simulation of the potential financial impacts of the future transfer pricing model

Support during the implementation, taking into account the impact of indirect taxes and customs duty