On December 21, 2016, Austria published an Ordinance on transfer pricing documentation in the official gazette, clarifying the requirements for the master and local files, which will apply to years beginning January 1, 2016. See BEPS Action 13.
The master file must include the following:
- Organizational structure of the multinational enterprise group.
- Description of the business.
- Documentation of intangible assets.
- Documentation of corporate financial activities.
- Documentation of financial and tax positions.
Organizational structure of the group
The organizational structure must include graphs on the group’s (i) legal and property structure and (ii) geographical distribution of the operating business units.
Description of the business
The description of the group’s business must contain a written description of the following:
- Value drivers for the company's profits.
- Supply and service chain for the five largest products and / or services offered by the group, as well as products and / or services accounting for more than 5% of group turnover.
- Essential service agreements between related companies, excluding research and development (R&D).
- Main geographic markets for products and services.
- Key risks and main assets used by the individual business units.
- Major business restructuring during the year of assessment.
Documentation of group’s intangible assets
Documentation must include the following:
- General description of the group’s overall strategy on the development, ownership and utilization of intangible assets, including the locations of the key R&D facilities and the location of R&D management.
- List of intangible assets or groups of intangible assets, which are significant for the purposes of offset prices.
- List of significant agreements between affiliates with respect to intangible assets, including cost-sharing arrangements, major research service agreements and licensing agreements.
- General description of the group’s offset pricing policy on R&D and intangible assets.
- General description of all material transfers of rights in intangible assets between associated companies of the group during the relevant year of assessment.
Documentation of corporate financial activities
The documentation of corporate financial activities must include the following:
- General description of the group’s financing, including significant agreements with third party creditors.
- Identification of the group’s business units that exercise a substantial financing function, including their jurisdiction of organization and place of effective management.
- Description of the group’s offset pricing policy with regard to financing agreements between affiliates.
Documentation of financial and tax positions
The group’s documentation must include:
- Consolidated financial statements for the relevant assessment year.
- List and brief description of the group’s advance pricing arrangements (APAs), as well as other decisions relating to the distribution of income between different countries.
The local file must include the following:
- Description of the domestic business unit.
- Documentation of the main business transactions involving the group as a whole.
- Financial information.
Description of the domestic business unit
The description must include:
- Management structure, organization chart and persons to which domestic management reports.
- Business activity and business strategy.
- List of main competitors.
Documentation of group’s main business transactions
The documentation must include:
- Description of the main business transactions within the group (e.g., procurement of manufacturing services, purchase of goods, provision of services, loans, financial and performance guarantees, licenses for intangible assets).
- Amount of payments made and received for each type of intragroup business transaction involving a domestic business unit.
- Identification of affiliates involved in the individual types of intragroup business transactions.
- Copies of all material intragroup agreements concluded by the domestic business unit.
- Comparability and functional analysis of the business unit, as well as relevant related companies with respect to all documented types of business transactions within the group, including all changes compared to previous investment years.
- Most appropriate method of calculating the prepayment method in relation to the type of business transaction in question.
- Affiliated company, which is chosen as a "tested party", as well as an explanation of the reasons for its selection.
- Summary of the material assumptions underlying the application of the offset pricing method.
- Where appropriate, an explanation of the reasons for carrying out a multiannual analysis.
- List and description of selected comparable external transactions and information on relevant financial indicators for independent companies on which the price calculation is based, including a description of the method used for comparative searches and the source of this information.
- Description of all adjustments made and an indication of whether such adjustments have been made to the results of the business unit under investigation, to the external comparison transactions, or to both.
- Reasons for the conclusion that the relevant business transactions were remunerated using the selected offset method.
- Summary of financial information used in application of the clearing pricing method.
- Copy of existing APAs.
The financial information must include the following:
- Audited annual financial statement drawn up in the annual accounts of the business unit for the relevant year of assessment. Otherwise, an unaudited annual financial statement must be submitted.
- Information and a breakdown key from which the financial data used in the application of the offset pricing method can be linked to the annual accounts.
- Summary tables on the relevant financial data of the comparative variables used in the analysis and the sources from which these data were collected.