Transfer Pricing

Transfer Pricing

The current relevance of Transfer Pricing is the natural evolution of increasing globalization, direct presence in the key markets of multinational enterprises (MNEs) and the resulting increase in cross-border transactions, which led to an increasing attention to the issue from international organizations, legislators and tax authorities.

With regard to the latter, the importance of the issue rests on the possibility that MNEs have to convey income from one State to another, relying on transfer pricing of goods (tangible and intangible) and services (including financial) between Group companies resident in different tax jurisdictions. By virtue of the expertise gained carrying on transfer pricing assessments, and taking properly into account the recent international developments, tax authorities of the major countries (including emerging countries such as China and India) have enacted new and specific transfer pricing regulations, and increase transfer pricing audits. In this context, Italian tax authorities are increasingly focused on transfer pricing, as it has been proved by several developments, the most significant being the intensification of assessment of intra-group transactions (see Ministerial Circular no. 20 of 2010), the implementation of the ruling procedure, and the introduction of a new regulation on transfer pricing documentation.

The need for MNEs to properly address transfer pricing systematically requires the adoption of a multidisciplinary approach, with the simultaneous input of expertise like tax law, contractual law, intellectual property protection, economic-valuation, strategy, and business, also turning a compliance obligation into a development opportunity (including, for instance, restructuring of business models, supply chain re-organisation, and exploitation of existing synergies)

In light of this, in 2010 a specialized team of transfer pricing experts was created - who was de facto operating in this field for many years – made up not only of economists of the Transfer Pricing practice of VVA but also of tax advisors from BEP, Bonelli EredePappalardo (BEP), one of the Italy’s leading law firm, and Graziano Gallo, chartered accountant who held leading roles at the Italian Revenue Agency ( including that of first Director of the International Ruling Office).

The partnership between these firms has allowed the integrated development of unique and distinctive know-how and expertise on transfer pricing, built on the realisation of relevant transfer pricing projects aimed at defining the transfer pricing policy for many Italian and foreign multinational groups. This innovative partnership grants clients with highly qualified and specialised services including all the expertise (economic, managerial, fiscal, and procedural) needed to deal with the most relevant issues, manage complex situations, and plan specific and innovative solutions tailored to the particular characteristics of the industry in which the client operates and its specific business organization.
The team can provide a wide variety of services, ranging from the collection of transfer pricing documentation to the negotiation of APA with Tax Authorities throughout the world.

More specifically, our consultancy can provide:

  • assistance in preparing and updating transfer pricing documentation to evidence the applied transfer pricing policy;
  • assessment of the applied transfer pricing policy:
    • quick audits or simulated inspections of the applied transfer pricing policy; and
    • drafting of second opinions.
  • drawing and planning of transfer pricing policy.
    • assessment of the group structure, and the relevant inter-company transactions;
    • selection of transfer pricing methods and their application;
    • economic analyses (comparability analyses, valuations, market analyses, etc.)
    • drafting of transfer pricing studies; and
    • definition and drafting of contracts.
  • drawing and integrated design of the transfer pricing policy to meet the requirements set by tax law and corporate governance rules (e.g., the Consob regulation concerning disclosure requirements for transactions with related parties).
  • full management - including dealings with worldwide Tax Authorities and other relevant corporate bodies - of:
    • Advance Pricing Agreements;
    • Mutual agreement procedures provided under the relevant tax treaties and the EU Arbitration Convention; and
    • Assistance in the course of tax audits and tax litigations.
  • drafting of expert opinions and valuations on specific issues (e.g., the impact of the economic crisis on transfer pricing, ownership, and valuation of intangibles etc.).

The consultancy services described above are also available in the context of other activities carried out by the BEP-VVA-Gallo team such as:

  • planning of corporate and business model restructurings (considering tax, legal, and economic implications);
  • tax planning (considering tax, legal, and economic implications).