overføringsvilkår

Overføringsvilkår, or transfer pricing, refers to the prices set for goods and services traded between related entities within a multinational enterprise. This includes transactions between parent companies and their subsidiaries, or between different subsidiaries. The primary purpose of transfer pricing is to allocate profits and expenses in a way that reflects the value of the goods or services exchanged, as if the transaction were conducted between independent parties at arm's length.

Tax authorities scrutinize transfer pricing arrangements to ensure that profits are reported and taxed in the jurisdictions where economic activity actually takes place. This is to prevent base erosion and profit shifting, where companies might manipulate transfer prices to shift profits to low-tax countries, thereby reducing their overall tax liability. The arm's length principle is the internationally accepted standard for determining appropriate transfer prices. It dictates that transactions between related parties should be priced as if they were between unrelated entities operating under similar circumstances.

Methods for determining arm's length transfer prices include the comparable uncontrolled price method, the resale price method, the cost plus method, and transactional profit methods. The choice of method depends on the specific nature of the transaction. Complex transfer pricing regulations and documentation requirements are in place in most countries to ensure compliance and transparency. Disputes can arise when tax authorities disagree with a company's transfer pricing methodology or the resulting profit allocation.