Intra-Group Pricing for Finance en Business Professionals
Transactions between group companies of a multinational enterprise group constitute a large part of global trade, approximately 60% in total. It is therefore of no surprise that transfer pricing, which is the pricing of intercompany transactions between group entities, is one of the most important and challenging international tax issues facing multinational enterprises. Disagreement with tax authorities on what constitutes arm’s length transfer prices may lead to time-consuming transfer pricing audits, double taxation, penalties and (reputation) damage to the company.
The Executive Program Transfer Pricing offered by the Erasmus School of Accounting and Assurance (“ESAA”) is targeted at professionals who are involved to some extent with transfer pricing and would like to increase or update their knowledge of transfer pricing.
The Executive Program consists of five modules discussing transfer pricing topics, such as what transfer pricing is, how to determine arm’s length transfer prices, how to identify transfer pricing risks, how to fill in the control function, how the Dutch tax authorities are organized with respect to transfer pricing and what transfer pricing documentation is required.
The Executive Program will be of benefit to you in case you answer yes to one or more of the following questions:
- Is your company engaged in transactions with group companies?
- Are you somehow involved in determining, implementing or managing arm’s length transfer prices for these intra-group transactions?
- Would you like to know more about transfer pricing rules for intra-group provision of services?
- Would you like to understand what to do in order to be compliant with transfer pricing documentation requirements?
- Would you like to understand how colleagues in other multinational enterprises deal with transfer prices or what your rights and obligations are during a transfer pricing audit?
- Would you like to understand in a short time frame the most important tools of determining arm's length transfer prices and topics involved in implementing and defending your company’s transfer pricing policy in order to ask the right questions and identify situations where coordination with other in-house departments should take place?
- Would you like to understand the transfer pricing aspects of business restructurings and financial transactions, such as intra-group loans, financial guarantees and cash pooling?
Participants are given the opportunity to send (anonymous) cases to the program director, Clive Jie-A-Joen (firstname.lastname@example.org), in advance. These are forwarded to the lecturers. Appropriate cases will be discussed.
Examples of intra-group transactions include:
- A producer sells goods to affiliated sales companies: What is an arm’s length transfer price for the sale of goods?
- The parent company provides head office services to subsidiaries: what is an arm’s length service fee and how should this fee be determined? What are the main challenges involved with charging a service fee to service recipients?
- The parent company provides a loan to a subsidiary: what is the maximum debt that a related party borrower could and would borrow? What is an arm’s length interest rate?
- The Swiss company grants a license of patents to an affiliated manufacturing company: What is an arm’s length royalty fee?
- Business restructuring (for example, as a result of digitization, Brexit or other commercial reasons): Functions, risks and/or assets of a group company are transferred to a foreign group entity. Should the restructured group company receive a compensation payment and pay an exit tax? Moreover, a new transfer pricing policy should be defined for the post restructuring related party transactions.
For tax purposes, the transfer prices of these related party transactions should comply with the arm's length principle. The importance of applying arm’s length transfer prices and the management and control of transfer pricing risks have increased in recent years. The fiscal and financial position of your company is therefore served with the correct application of the relevant laws and regulations, in which the connection with the economic reality is also of great importance.
Are you a financial director, CFO, controller, finance or treasury professional or legal counsel? And are you dealing with transfer pricing, but would you like to increase or update your knowledge of transfer pricing so that you can perform your task even better? This Executive Program is then ideal for you.
3. Why is Transfer Pricing Important?
It is important to realize that transfer pricing is not only important for large multinational enterprises (“MNEs”). Small MNEs and semi-public organizations must also comply with the arm's length principle and satisfy transfer pricing documentation requirements. Disagreement with the Dutch and foreign tax authorities on what an arm's length transfer price is, can lead to long and costly tax audits, double taxation, penalties or reputation damage. Therefore, setting an arm's length transfer price is of great importance. Furthermore, a thorough implementation and its control mechanisms are indispensable, as well as clear transfer pricing (dispute) management. All this leads to the effective realization of transfer pricing control. It also ensures that the compliance requirements are met.
The focus on transfer pricing has increased significantly in recent years due to amongst others the OECD’s project on base erosion and profit shifting (“BEPS”) with its themes of substance, transparency and coherence. This project has drastically altered the international tax system (including revised transfer pricing standards and supplementary documentation obligations) to prevent alleged tax avoidance and tax evasion. These standards are currently implemented globally in domestic legislations. It is therefore expected that transfer pricing audits and controversy will increase in the future.
Transfer pricing is therefore a very important and challenging international tax issue MNEs are facing. The management control aspects of transfer pricing should also be considered. It is therefore of no surprise that the topic of transfer pricing has attracted the attention of various internal stakeholders, such as the finance & control department, the board and the legal department, in addition to the tax department. External stakeholders (e.g. tax authorities, external auditors, the European Commission and non- governmental organizations) are increasingly interested in the transfer pricing policy of an MNE as well.
Het Executive Programma Transfer Pricing is bedoeld voor finance professionals, bedrijfseconomen, controllers, treasurers, accountants en fiscale en juridische professionals die graag de basisprincipes van transfer pricing en het ondernemingsbeleid hieromtrent willen begrijpen om zodoende verrekenprijsrisico’s te identificeren en te managen. De modules bieden een inleiding tot transfer pricing uit een (bedrijfs-)economisch, fiscaal en juridisch oogpunt. Ook worden de laatste ontwikkelingen besproken. Daarnaast gaan de modules in op het belang van en specifieke aandachtspunten bij het ontwerpen, implementeren en de beheersing van een effectief verrekenprijsbeleid. De derde module betreft verrekenprijsdocumentatie en het risico- en geschilmanagement in relatie tot transfer pricing. Een vertegenwoordiger van de Nederlandse Belastingdienst gaat in op welke aspecten meegenomen moet worden om compliant te zijn met verrekenprijswetgeving. De vierde module richt zich op de implementatie van transfer pricingbeleid binnen een MNO groep. Module 5 gaat in op de verrekenprijsaspecten van financiële transacties, zoals leningen, financiële garanties en cash pooling. Tevens gaat de spreker in op de aspecten van transfer pricing omtrent (post-acquisitie) herstructureringen van MNO’s.
The program director is Clive Jie-A-Joen PhD MBV.
Clive works at Simmons & Simmons LLP, an international law firm. After he obtained his PhD at the Erasmus University Rotterdam in June 1997, Clive has assisted multinational enterprises in designing, implementing and defending their transfer pricing policies. He focuses on the economic analysis of transfer pricing and works together with tax advisors, lawyers, controllers and finance professionals on transfer pricing issues. Clive is also associated with the Tax Law department of the Erasmus University Rotterdam as well as ESAA (which also includes the RC (chartered controller) and RA (chartered accountant) training). In addition, Clive is a board member of the transfer pricing section of the Dutch Association of tax advisors (“NOB”). He regularly lectures and writes articles on transfer pricing.
The lecturers in this program are:
- Natalie Speet – Deputy head of Department of formal Law and Recovery at the Ministry of Finance;
- Peter Kavelaars – Professor of fiscal economics at Erasmus School of Economics and former director of the scientific bureau of Deloitte Netherlands;
- Dennis Hovinga – Head of Tax at ASM International;
- Ruud Snoeker – Responsible teacher in internal control Post-Master's degree program to chartered accountant (“Register Accountant”);
- Bernard Damsma – Associate Partner EY;
- Clive Jie-A-Joen – Program director and Counsel Transfer Pricing Simmons & Simmons LLP.
- Willem-Jan van Veen– Specialist CbCR, exchange rulings and mandatory disclosure at Dutch Tax Authorities
6. Content and structure of Program
This Executive program consists of four introductory modules and a specific module discussing the transfer pricing aspects of financial transactions and business restructurings. Each module takes place on a Wednesday or Thursday and starts at 15:30 and ends at 20:30.
Module 1. Introduction to Transfer pricing.
25 September 2019
Lecturers: Prof. P. Kavelaars PhD; C.S.J. Jie-A-Joen PhD
Module 2. Transfer pricing methods and (intra-group) services.
9 October 2019
Lecturers: B. Damsma MSc; C.S.J. Jie-A-Joen PhD
Module 3. Transfer pricing documentation and dispute resolution.
30 October 2019
Lecturer: mr. W.J.G. van Veen MSc
Module 4. Transfer pricing implementation.
14 November 2019
Lecturers: R. Snoeker MSc RA; Mr. D. Hovinga
Changes because of unforeseen circumstances may alter the composition or the dates of the program slightly. These changes will be communicated in a timely manner.
7. Practical information
The fee for this Executive Program, including parking ticket, food and drinks, amount to €575 per module. If you choose to follow all five modules the fee is €2,700. These amounts are exempt from VAT.
During the last PE course for chartered controllers (RC) Clive Jie-A-Joen PhD MBV presented and his presentation was assessed with an 8.6 by the participants.
9. Contact details
For questions about this Executive Program, please contact the Program Coordinator:
Erasmus School of Accounting & Assurance is an educational institution that is acknowledged by the NBA (Dutch accountants’ professional organization) and thus entitled to reward PE-points to educational activities. For this Executive Program you will receive 4 PE-points per module.