Transfer pricing regulations and documentation requirements may differ slightly from country to country but are based on the same framework - the OECD Transfer Pricing Guidelines. The OECD coordinates international collaboration in the fight against shrinking tax bases and profit shifting.
One result of this global cooperation is the principle incorporated in the tax laws of countries (including Estonia, Latvia and Lithuania) that companies entering into transactions with related parties, such as companies belonging to the same group or business owners, must agree on transaction prices (transfer prices) based on the arm’s length principle. In addition, those companies must be prepared to prove it with competent transfer pricing documentation.
Merko Ehitus is a group listed on the Tallinn Stock Exchange, whose companies construct buildings and infrastructure and energy installations and develop real estate. The group operates in Estonia, Latvia, Lithuania and Norway. We offer complete solutions in both the construction process and real estate development, from initial preparation to the warranty-period service. That is why we also have very high expectations for our advisors - it is important to understand our business and countries of operation, and we expect our advisers to offer pragmatic solutions that meet our needs and take into account all the necessary aspects.
The trans-Baltic co-operation started with Grant Thornton Baltic in 2019 has focused mainly on the issue of taxes, more specifically transfer prices. The cooperation so far has been pleasantly professional, correct and concrete. Our needs have been understood and acted upon.
Priit Roosimägi
AS Merko Ehitus, Head of Group Finance Unit
At Grant Thornton Baltic, our tax and legal specialists as well as financial advisers, will assist you in all matters relating to transfer pricing. We will develop transfer pricing principles for your company or group that comply with internationally accepted methods and practices.
If your business takes place in different countries, we will assemble an international team of consultants, with whose help we will find a solution that suits you.
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Tax risk analysis and consulting
Transfer pricing must be in line with the value chain between related parties. We help identify risks and find solutions. |
Analysis and updating of benchmarks
Up-to-date market data must be used to find the market value of the transfer price. We use several international databases to obtain the benchmark data for your business model to determine the transfer price. |
Developing a competent pricing policy
We help to plan or reorganize transfer prices for planned transactions. |
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Proper transfer pricing documentation
The purpose of transfer pricing documentation is to demonstrate that related party transactions are in line with the arm's length principle. We prepare transfer pricing documentations in accordance with national legislation and international OECD guidelines. |
Drawing up agreements
We help you to regulate the legal relations between the related parties in accordance with the company's current or planned transfer pricing policy. |
Help with transfer pricing revisions
We can help you with any questions regarding transfer pricing tax audits. We advise and protect your interests in case of control by the tax office. |
For companies operating in Estonia, Latvia, Lithuania and the Scandinavian countries, we have created a team of advisors who know the details of transfer pricing rules in the above-mentioned countries. You can also find a brief overview of transfer pricing in our brochure [ 936 kb ].
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The Danish tax authority increased the taxable income of Tetra Pak Processing Systems A/S due to shortcomings in transfer pricing documentation and continuous losses. The Danish Supreme Court reached the conclusion that the transfer pricing documentation filed by the company did not meet the requirements as the documentation lacked a competent comparability analysis.
Maintaining proper accounting on transfer prices and documenting the reasoning for conformity to market value is in the interests of every enterprise, as it avoids tax risks. In preparing documentation, the requirements of legal acts should be considered along with the specific company’s risks and needs.
The OECD (Organisation for Economic Co-operation and Development) regularly updates its 2017 transfer pricing guidance. It is worth keeping up to date with the OECD guidelines because transfer pricing regulations in Estonia and many other countries rely on the OECD’s guidelines.
