Transfer pricing

If the company makes a strategic decision to "go abroad", a lot of practical items needs closer attention. For example: is the company also opening production facilities in the other country or will it only keep inventory? And probably, in a phase of growth, outsourcing of warehousing might also be an option.

Also the hiring of staff (in an start-up phase in most cases sales-people are hired) is an important topic. What are the laws and rules connected with being an employer? How do I attract staff? Should I consider to use employment-agencies, rather than hiring employees myself?

These items are just examples. There is much more to cover before your business is actually operating abroad. Somewhere in these considerations the transferpricing topic might also play an important role. Shortly summarized: The board of the company needs to decide how to allocate profits between the home-country and the subsidiaries abroad. These decisions might partially be driven by tax-considerations. It is off course attractive to set up production-facilities in low corporate tax juridictions. Ireland was a good example in the last decades. It attracted a lot of business because of its low corporate tax rates.

When considering to operate abroad in the most tax effective way attention needs to be paid to:

• Operating "at arm's length", meaning the margins between the parentcompany and its daughter needs to be comparable with the trade between two third parties.
• Tax treaties. The Netherlands, for example, has tax treaties with the most important economies in the World. Also the number of treaties is quite impressive, when compared with other countries.
• Tax rulings. It is possible to negotiate a tax "deal" with tax inspectors. This means that for a longer period the tax rates and the way of leviing taxes can be fixed. This is very important, because by means of a tax ruling, a company can secure her obligations for a longer period with respect to the tax authorities.

PHW auditors & tax advisers is able to advise you on these areas, and capable, being part of an international network, of guiding your company to the most tax attractive structures.