Preparation of transfer pricing documentation file

3. April 2017 | Reading Time: 2 Min

In the case that a legal entity had transactions with related parties during the fiscal year, it would be obliged to prepare transfer pricing documentation file, as follows:

  • Full report,
  • Simplified report.

In order to qualify for preparation of, and submission simplified transfer pricing documentation file to the Tax Authorities, one of two conditions should be fulfilled, as follows:

  • Specific related party transaction is regarded to be one-off transaction and does not exceed RSD 8 million in total, in a fiscal year (cca. EUR 65,000),
  • Total value of all transactions with specific related party during a fiscal year does not exceed RSD 8 million (cca. EUR 65,000).

Tax legislation envisages that the transfer pricing documentation file is to be submitted to the Tax Authorities together with the corporate income tax calculation i.e. within 180 days from the last date of a tax period.

Contents of a Transfer Pricing Documentation File

The transfer pricing analysis should cover the following areas:

  • General description of organizational, legal and operational structure of the group,
  • General description of business model, business strategy and policies of the group,
  • Overview of the legal entity’s business,
  • Market and industry information in which the legal entity belows,
  • Functional analysis of the legal entity’s activities (based on the assessment of functions performed and risks assumed by each party to the transaction, as well as tangible and intangible assets used),
  • Economic analysis of the legal entity’s activities includes determination of the appropriate transfer pricing method and identification of the benchmarking transfer pricing per type of transaction subject to our analysis.

In determining market prices i.e. in analysis of transfer prices used in transactions between related parties the comparability analysis of the transactions with related parties (the benchmarking analysis) could be prepared by using commercial database Amadeus. Amadeus database contains financial information of about 20 million companies in Europe. The data in the Amadeus database are collected by the Company Bureau van Dijk from various official local sources and are standardized to allow the search of companies and their comparison by number of criteria.

TPA has broad expertise in preparing transfer pricing documentation files and in performing benchmarking analysis via Amadeus database.

audit_newsletter_mart_2017_eng_2.pdf