Transfer pricing is at the core of international trade and a vital issue for multinationals. Countries worldwide are today scrutinising inter-company pricing strategies and enacting rules to ensure appropriate allocation of income and assets among the various tax jurisdictions in which a multinational operates.
The transfer pricing environment in Luxembourg is evolving rapidly to embrace OECD standards and the latest developments in its Base Erosion and Profit Shifting initiative. On 27 December 2016, the Luxembourg tax authorities issued a circular regarding the tax treatment of Luxembourg companies engaged in intra-group financing activities, and they are increasingly focusing on the arm’s-length nature of other types of transaction.
Arendt has been active in tax advisory since the creation of the firm in 1988, and launched its transfer pricing practice in 2011. Initially focused on compliance with the requirements of the authorities' 2011 circulars establishing rules for inter-company financing, it has evolved to provide complete transfer pricing solutions to customers in sectors including investment funds, asset management, banking and insurance.
The transfer pricing team provides integrated services in close collaboration with lawyers from other practice areas to ensure the maximum quality of work for our clients.
Our services include:
- Ensuring compliance with the December 2016 circular on intra-group financing transactions.
- Review of inter-company transactions, transfer pricing risk assessment and guidance on solutions.
- Detailed functional and risk analysis.
- Benchmarking studies for all types of inter-company transaction including financing, provision of management and other services, manufacturing and distribution, and licensing of intellectual property rights. Our team also performs benchmarking studies to determine arm’s-length royalty rates, interest rates on loans, and guarantee fees.
- Review of inter-company contracts from a transfer pricing perspective.
- Determining arm’s-length remuneration charged by multinationals for fund, risk and portfolio management functions.
- Drafting of transfer pricing documentation studies and opinions.
- Review and update of transfer pricing studies prepared by clients in-house or by other consultancy firms.
- Intellectual property planning.
- Drafting and filing of advance pricing agreement applications and liaising with the Luxembourg tax authorities.