Many changes in reporting and accounting rules relating, among others, to transfer pricing.

Simplifications for small businesses

One of the basic amendments increases the capital criterion on the basis of which an entity is considered to be a related entity. Until recently, it was 5%, and since 2017 the limit has been increased to 25%. Unless the capital, family, personal or other criteria that define the entity as related are met, no transfer pricing documentation will need to be prepared from 2017, unless the income or expenses for the year preceding the tax year were more than € 2 million .
If, however, the limit of € 2 million is exceeded in a given year, it will be necessary to prepare documentation for transactions with a related entity not only for the given year but also for the next year, which is new compared to previous years.
Another change involves the need to make a declaration on the preparation of transfer pricing documentation, which will need to be submitted no later than by the date on which the deadline for submission of tax returns ends.

Revenues of more than 2 million euros

Beginning in 2017, the basic transfer pricing documentation for taxpayers whose income or expenses exceeds EUR 2 million per year should consist of information such as:

• transaction description;
• data identifying the parties to the transaction;
• characteristics of the functions, assets and types of risk involved in the transaction;
• description of the methodology used for calculating the income or loss of the taxpayer;
• financial data that make it possible to compare the methodology used for calculating income or loss with the information in the accepted financial statements;
• full details of the taxpayer, his business and business environment;
• description of the strategy covering data on the restructuring accomplished;
• documents, in particular contracts and price agreements.

Revenues of more than 10 million euros

In addition to all the above information, the basic transfer pricing documentation for taxpayers whose income or cost exceeds EUR 10 million per year should additionally contain an analysis justifying that the values used for the transaction are market-based. For this purpose, the characteristics of the subject matter of the transaction must be given together with a reference to the current situation in the industry.

Revenues of more than 20 million euros

From 2017, taxpayers who achieve revenues or costs of at least 20 million euros, in addition to the preparation of the basic documentation, will be required to prepare information about the group of companies. They should illustrate the organizational, legal, ownership and management structure as well as the applied transfer pricing policy.