Financial Services Transfer Pricing

Whether journalistic investigative research à la LuxLeaks, Panama and Paradise Papers or the OECD's BEPS project: Rarely has the taxation of international business relations been so much in focus as it is at present. Among politicians, legislators, and the media – transparency and traceability of tax payments are discussed everywhere.

Financial services companies are particularly affected by this development. This is because they usually operate on a supranational level, and cross-border activity is the rule rather than the exception. The audit of the structure and proper documentation of transfer pricing has therefore become a focal point in tax audits.

For taxpayers, the continuous changes in legislation and administrative interpretation also pose a growing challenge. The Business Premises Profit Allocation Regulation as well as the corresponding administrative guidelines (VWG BsGa) can be cited as examples. The new, complex rules on profit distribution must be analysed in light of the functional division of labour between the involved business establishments, and the effects on practical implementation must be inferred.

The Financial Services Transfer Pricing Team provides full support to business entities in the financial services industry in addressing transfer pricing challenges. It provides comprehensive consulting services regarding the structure, documentation and operational implementation of transfer pricing for taxpayers in the financial services sector (banks, asset managers, insurance companies, etc.). All services are designed to ensure that business entities comply with domestic and international transfer pricing regulations.

Our range of services includes in particular:

• The preparation of transfer pricing studies, i.e. the development of solution approaches for the structuring of newly established business relationships
• The creation and quality assurance of transfer pricing documentation
• Support with the implementation and compliance with reporting obligations (country by country)
• The preparation of benchmark studies for performance relationships of all kinds (e.g. the determination of a range of arm's length interest rates for shareholder loans or of arm's length profit mark-ups for service charges)
• Support in international dispute resolution proceedings (such as in APA, mutual agreement and arbitration procedures)
• The development of IT-based tools for the operational implementation of transfer pricing as well as support for operational transfer pricing projects of all kinds (including data procurement and data archiving)
• Assistance with tax compliance management projects in the area of transfer pricing
• The preparation of transfer pricing guidelines or organisational manuals
• Ongoing support in operational audits
• The drafting of service level agreements and other transfer pricing-specific contracts
• The preparation of expert opinions on specific issues

Within the KPMG Financial Services Transfer Pricing Team, we continuously follow legislative and executive developments at the national and international level and put our vast industry-specific expertise to use, thanks to our specialised advisory approach. This always ensures proactive and forward-looking advice for our clients, taking market standards into account. The close exchange with our colleagues from FS Advisory (particularly FS Regulatory) ensures that non-tax developments (such as regulatory changes) are also taken into account in a timely manner when developing transfer pricing concepts and advising on change projects.

Our integration into the global KPMG Financial Services Transfer Pricing network also enables efficient coordination and support of international projects.

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