Our Transfer Pricing Practice offers Israel’s most comprehensive guidance on international transfer pricing. Their outstanding command of both Israeli and global requirements, has resulted in an unmatched acceptance rate of their transfer pricing studies by both Israeli and worldwide tax authorities.
Our transfer pricing practice provides a full range of services to its clients, focusing on the legal, economic, and business related aspects of the client's tax structure and supply chain. Each and every transfer pricing study performed by our firm gets the full attention of our partners, who are also responsible for the drafting of the intercompany agreements, which consist an integral part of the documentation requirements of applicable transfer pricing regulations.
Our services include:
- Transfer pricing studies: Our team has drafted, filed, and successfully defended hundreds of transfer pricing studies, all around the globe, for both Israeli and foreign multinationals. For projects of limited scopes, our team also provides transfer pricing consulting through a transfer pricing memo or a planning study.
- Intercompany agreements: Any intercompany transaction must be accompanied by an intercompany agreement, which is based upon the results of the transfer pricing study and the analysis performed as part of the study. In some countries, the local subsidiary cannot start operating without an intercompany agreement in place. On the other hand, an intercompany agreement by itself, without the accompanying study, does not suffice, and an agreement which is not in line with the study, in terms of pricing, methodologies and functions, is an exposure by itself.
- Transfer pricing policy (SOP): In larger corporations, with more than a couple of subsidiaries, it is recommended to adopt a transfer pricing policy, which is drafted in the form of a standard operating procedure, and which guides the company on all its intercompany transactions. Additionally, this is highly recommended – and sometimes required – for any multinational which is a public company, operating under SOX or similar rules, including those applicable in Israel.
- Advance pricing agreements: An Advance Pricing Agreement ("APA") is the equivalent of a "pre-ruling" for transfer pricing matters, in the form of an advance agreement with the tax authorities, on an appropriate transfer pricing methodology for one or more transactions, for a fixed period of time. This is achievable in several countries, including in Israel, and can be either unilateral (i.e. in one country) or bi-lateral (with both tax authorities involved), when applicable tax treaties exist. An advance pricing agreement does not mean the company will not be audited, but rather that the tax authorities will not question the transfer pricing methodology used by the company, and is thus recommended mainly for large or complex transactions.
- Transfer pricing Implementation: Holding a transfer pricing study, a transfer pricing policy, or an inter-company agreement, without actually implementing them, does not suffice in case of an audit and does not satisfy the requirements of the applicable regulations worldwide. Our team helps the corporation in implementing the results of the study in the most tax efficient way, subject naturally to applicable laws, and combines the study with the group's overall tax planning.
- Intercompany finance: Intra-group funding arrangements have long been used as means for centralization of a group’s cash and currency, as a mean to control risk management, and as the preferable way to fund certain transactions or the incorporation of new subsidiaries within the group. Recently, the transfer pricing aspects of intercompany financial arrangements have come under detailed and ever growing scrutiny. Under current legislation and rules, from a tax and transfer pricing perspective, financial arrangements between related parties must be transacted on an arm’s length basis, taking into account the parties' ability to receive funding or guarantees in the market. Non-documented intercompany loans, for example, may lead to nondeductible interest payments, and to the addressing of such loans as equity. Our services in this respect range from a review of interest or guarantee charges, through supplying supporting documentations, and to designing a transfer pricing policy (in the form of an SOP) which will support your group’s treasury policies.
- Valuations: Valuations of tangible and intangible assets can have a significant impact on the group’s decision making processes and business plan. When transferring assets within or outside the group, it is essential to have an economically robust transfer pricing documentation and valuation, to support the transfer values. Additionally, our practice includes the preparation of valuations to support other transactions, such as trasnfer of shares, internal reporting requirements, etc.
- BEPS readiness: our transfer pricing department assists multinationals in getting ready for the newly adopted OECD guidelines on Base Erosion and Profit Shifting, and reviews their whole transfer pricing documentation and positions, amending them where needed.