Three specialists from TPS by Auxadi, the firm’s division specializing in transfer pricing, led the second session of their webinar series, this time focused on intergroup corporate services. The digital meeting featured insights from: Claire Sanga, Global VP; Rodrigo Stokkeland, Manager; and Antonio Pina, Partner.

Dozens of CFOs attended the session on Wednesday, April 22nd, to access the experts’ analysis. The webinar’s central theme was strategic planning and proactive documentation preparation -decisive factors that ensure regulatory compliance and technical defense before public administrations.

Issuing and documenting services

The specialization of TPS by Auxadi, represented by three experts with international profiles, helped resolve operational uncertainties and contingencies that commonly affect multinational groups.

Rodrigo Stokkeland highlighted the importance of drafting a “service provision agreement” so that the entity “precisely describes what service is being provided, who provides it, and who the recipient is”.

The provision of international financial services is a strategic pillar for resilience in any multinational entity during its global expansion process. For this reason, Antonio Pina delved into the role of the providing entity. He noted that a service meets the ‘willingness to pay’ principle because “someone will provide that activity”. These situations are particularly representative in cases involving the “centralization of IT infrastructure”.

Consequently, the TPS by Auxadi partner emphasized the importance of building “real-time evidence that may prove useful if required by the Administration”. According to Rodrigo Stokkeland, it is fundamental to “justify that service” to institutions and, likewise, the “team” performing the delivery.

Margins in preparation

International transfer pricing management, a subject under strict supervision by international bodies, ensures total transparency before tax authorities.

In this context, Claire Sanga explored the OECD-defined category for “low value-adding intra-group services”, which are “delimited within a specific list”. This simplified regime allows for a 5% margin to be applied to costs incurred. However, the Global VP of TPS by Auxadi warned that, to ensure compliance, “it is not enough to simply refer to OECD guidelines”.

Court rulings

The speakers then discussed several court rulings in Spain. The first resolution presented referred to invoices submitted from 1999, while “the contract provided was from 2013”. On this occasion, the court dismissed the “deductibility of that expense”, commented Rodrigo Stokkeland.

Another controversy centers on determining “who the beneficiary of the service is”, even when the “inspection recognizes that the service was real”. Antonio Pina clarified that “holding company management fees” represent “costs that are indeed necessary for the group’s proper functioning, but do not necessarily have to be borne by the subsidiaries further down the chart”.

Intergroup services and decision-making

TPS by Auxadi promotes this webinar series with the aim of advising CFOs on designing and strengthening their transfer pricing policies. This session on intergroup corporate services allowed for the identification and analysis of potential inconsistencies that could pose risks before the Administration.

TPS by Auxadi is the expert transfer pricing department of Auxadi. Operating in over 50 countries, we support our clients in preparing and updating transfer pricing policies to properly comply with national and international regulations. This unit has been recognized for five consecutive years in Tier 1 for transfer pricing by International Tax Review (ITR World Tax).

Do you need help preparing your transfer pricing policies? Consult our experts below via the contact form.

Author:

Auxadi Corporate