Keep it real: understanding legal 'anchor points'
The OECD’s TP Guidelines are very clear that intercompany transactions need to be assessed in the context of the legal and regulatory environment in which the relevant group entities actually operate. So the starting point in the creation of TP policies and documentation is to understand how the group actually works, commercially and legally.
One aspect of this is the legal ‘anchor points’, which are part of the objective reality of how the group interacts with the outside world. They are fixed, unless the group changes its operating model.
The slide above gives a few examples, such as:
For the documentation to be meaningful, intercompany transactions will need to be ‘mapped’ onto the relevant anchor points. This precedes the choice of TP method, and any benchmarking or comparables. If this mapping is not done correctly, any TP policies will be a work of fiction, because they will have failed to delineate the ‘actual transactions’ concerned.
Article by Paul Sutton
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Transfer Pricing and International Tax Specialist
2 年Completely agree. But the operating model also encompasses the roles and responsibilities of employees - what people actually do. And this might put a different complexion on the TP analysis notwithstanding the legal anchor points.