Transfer pricing: Simplified pricing for routine sales activities from 2024?

While the se­cond pil­lar of the OECD's BEPS 2.0 pro­ject (known as Pil­lar II) with glo­bal mi­ni­mum ta­xa­tion is at­trac­ting a great deal of at­ten­tion world­wide, it is of­ten as­su­med that the pa­ckage of mea­su­res known as Pil­lar I only af­fects the very large mul­ti­na­tio­nal groups. Howe­ver, it also con­ta­ins re­gu­la­ti­ons on Amount B, which ap­plies to all cor­po­rate groups with cross-bor­der sa­les func­tions and is not lin­ked to any tur­no­ver or pro­fi­ta­bi­lity re­qui­re­ments. This me­ans that a large num­ber of tax­pay­ers, in­clu­ding SMEs, would be af­fec­ted by the Amount B ru­les.

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The con­sul­ta­tion pa­per pre­sen­ted by the OECD on 17.07.2023 cla­ri­fies what is in­ten­ded with the Amount B re­gu­la­ti­ons: As part of the in­itia­tive to re­form in­ter­na­tio­nal cor­po­rate ta­xa­tion, Amount B is in­ten­ded to sim­plify and stan­dar­dize the trans­fer pri­cing of rou­tine dis­tri­bu­tion units wi­thin the group ("ba­se­line mar­ke­ting" and "dis­tri­bu­tion ac­tivi­ties") by ma­king cor­re­spon­ding ad­just­ments to the OECD Trans­fer Pri­cing Gui­de­lines. In doing so, the OECD is ai­ming to sim­plify ad­mi­nis­tra­tive pro­ce­du­res for both mul­ti­na­tio­nal com­pa­nies and the tax aut­ho­ri­ties.

Scope of ap­pli­ca­tion of Amount B

The stan­dar­di­zed re­mu­nera­tion by the Amount B con­cept should pri­ma­rily ap­ply to the (who­le­sale) dis­tri­bu­tion of goods. The fol­lo­wing in­tra-group busi­ness re­la­ti­ons­hips should fall wi­thin the scope of Amount B:

• the purchase/sale of fi­nis­hed goods (who­le­sale) to third par­ties,
• the ac­tivi­ties of a com­mer­cial agent or com­mis­sion agent that lead to the who­le­sale of goods.

Howe­ver, ap­pli­ca­tion to raw ma­te­ri­als and ser­vices is cur­rently ex­clu­ded. The dis­tri­bu­tion com­pany should also only be able to carry out ad­di­tio­nal eco­no­mi­cally si­gni­fi­cant ac­tivi­ties if these can be cle­arly de­fi­ned. Com­pli­ance with cer­tain key fi­gu­res is en­vi­sa­ged as an ad­di­tio­nal re­qui­re­ment.

Note: In con­trast to the glo­bal mi­ni­mum ta­xa­tion of com­pa­nies and other mea­su­res in Pil­lar I, the re­gu­la­ti­ons on Amount B are not lin­ked to spe­ci­fic tur­no­ver th­res­holds and the­re­fore also ap­ply to small and me­dium-si­zed groups of com­pa­nies.

If the sa­les com­pany meets these re­qui­re­ments, the trans­fer pri­ces should be cal­cu­la­ted using the tran­sac­tion-ba­sed net mar­gin me­thod and the EBIT mar­gin as a com­pa­ra­tive in­di­ca­tor. For this pur­pose, the OECD pro­vi­des a price ma­trix that de­ter­mi­nes an EBIT mar­gin of bet­ween 1.5% and 5.5% de­pen­ding on the sec­tor and eco­no­mic in­di­ca­tor (as­set and cost in­ten­sity). There are also plans to ad­just the ma­trix to take ac­count of in­di­vi­dual coun­try risks.

Im­ple­men­ta­tion at the be­gin­ning of 2024

The OECD's fi­nal re­port on Amount B is ex­pec­ted at the end of 2023. This me­ans that the plan­ned mea­su­res are li­kely to be in­clu­ded in the OECD Trans­fer Pri­cing Gui­de­lines as early as Ja­nu­ary 2024. An im­ple­men­ta­tion plan and the date of the first ap­pli­ca­tion are cur­rently being dis­cus­sed. Whe­ther this will be a bin­ding ap­pli­ca­tion or whe­ther tax­pay­ers will be free to im­ple­ment the mea­su­res re­mains to be seen. Com­pa­nies should the­re­fore fol­low the de­ve­lop­ments clo­sely and make the ne­cessary pre­pa­ra­ti­ons.

Would you like to re­ceive fur­ther in­for­ma­tion on the sim­pli­fi­ca­ti­ons for in­tra-group sa­les ac­tivi­ties? Then re­gis­ter for our webi­nar at the be­gin­ning of 2024, which we will or­ga­nize di­rectly af­ter the pu­bli­ca­tion of the fi­nal OECD re­port on Amount B.