In the transfer zone

Helping a multinational group achieve optimal results through strategic transfer pricing solutions. 

When a multinational group that manufactures and distributes systems for the automotive industry found themselves in a volatile profit/loss situation that put them at risk of tax adjustments globally, they turned to our team of tax experts for help. 

Co-creating tailored solutions

Led by Baker Tilly in Germany, we put together a multijurisdictional team from across Asia, the Americas and Europe to develop a new transfer pricing framework to address the shortcomings in the client’s original remuneration system. 

Our team conducted financial simulations to refine transfer pricing methodologies, scrutinised VAT and customs implications, and addressed legal considerations through meticulous intercompany agreement preparation. 

The new framework ensures the German parent company is duly recognised for their integral contributions to the group's business activities. This encompasses fair compensation for the provision of intellectual property, a cornerstone for value creation within the group, and equitable remuneration for the provision of central services to their subsidiaries. 

Additionally, we realigned the compensation approach for production and sales entities, moving away from a cost-plus model to one that aligns with value creation.

Optimising tax efficiency 

The new structure ensures optimal financial outcomes for the client. 

They not only meet local reporting requirements and adhere to OECD guidelines, but they also effectively mitigate the risk of local tax adjustments and double taxation. 

But our team’s work didn’t stop there. 

As the new transfer pricing framework was being developed, the client embarked on integrating a new corporate entity in India into their group.

Our team helped bring the new entity into the group’s revised transfer pricing structure, addressing VAT, customs and legal requirements to facilitate a seamless integration process.