The Issue

Countries all over the world try to charge the domestic corporate income tax on the fair margin (fair profit) for the products, rights or services made or provided within their territory.

Groups of companies operating in various parts of the world try to achieve the most advantageous taxation scheme by trying to reach the highest margin for their products, rights or services in the countries with the lowest corporate income tax rates rather than in the countries where they were actually made or provided.

In the context, jurisdictions all over the world have jointly accepted principles and rules for fair transnational pricing (transfer pricing) to ensure taxation of the fair margin for the products, rights and services made or provided within their territory.

About the Service

The purpose of transfer pricing is to establish the prices for the purchase and sale of products, rights or services between related parties at the levels which would be applicable if these transactions are carried out between separately run entities on a free and competitive market.

Being part of an international consulting company, we have the necessary methodology and databases to establish the market margins at which related parties in Bulgaria and abroad trade in products, rights or services between themselves.

In Bulgaria, the compliance with the transfer pricing rules is laid down in the Corporate Income Tax Act and any deviation from these rules brings about substantial audit penalty orders.

The burden of proof for the compliance with the transfer pricing rules in the transactions between related parties in Bulgaria and abroad falls on the companies themselves.

With a view to protecting the interests of Bulgarian companies which belong to a group and deal in products, rights or services with related parties abroad, we prepare well-grounded reports in the internationally standardized format to prove the compliance of all transactions between the related parties in different jurisdictions with the transfer pricing rules.

The Price

The price of the service may range from several thousand to several tens of thousands of euro, depending on the industry, the number of transactions and related parties involved in them, the relevant jurisdictions, and many other factors to be taken into consideration.