Evaluating a Questionnaire on Transfer Pricing Issues of SMEs That Operate in the EU

Abstract

This chapter evaluates a questionnaire regarding transfer pricing issues of SMEs that operate in the European Union. This questionnaire focuses on general transfer pricing concepts, such as transfer pricing methods, documentation, advance pricing agreements, a country-by-country report, the compliance costs of transfer pricing, the time needed for transfer pricing requirements and tools that decrease the compliance costs of transfer pricing. The evaluation is performed from several points of view. The evaluation is conducted first from the perspective of all EU Member States where SMEs operate, then from the perspective of parent companies and finally from the perspective of subsidiaries. Moreover, the questionnaire detects whether SMEs prefer to introduce simplified measurements for transfer pricing rules and specifies which type of measurement is preferred. In addition, the questionnaire determines whether SMEs prefer the implementation of a C(C)CTB system and whether they would welcome EU-comparable benchmarks for selected industries.

Annex

Questionnaire

1. Please state the category to which your enterprise. If your enterprise is classified as large, please do not fill in the questionnaire.     a. Large (staff headcount >250, turnover >40 million EUR or balance sheet total >20 million EUR)     b. Medium-sized (staff headcount <250, turnover <40 million EUR or balance sheet total <20 million EUR)     c. Small (staff headcount <50, turnover <8 million EUR or balance sheet total <4 million EUR)     d. Micro (staff headcount <10, turnover <0.7 million EUR or balance sheet total <0.35 million EUR)

2. Please indicate the resident country of SME.

3. Are you a parent company or subsidiary?

4. If you are parent company, do you have a foreign subsidiary? If yes, please indicate the resident country of the subsidiary.

5. Please select the NACE sector in which SME is acting:     A (01–03 NACE code)—Agriculture, forestry and fishing;     B (05–09 NACE code)—Mining and quarrying;     C (10–33 NACE code)—Manufacturing;     D (35 NACE code)—Electricity, gas, or steam and air conditioning supply;     E (36–39 NACE code)—Water supply, sewerage, waste management and remediation activities;     F (41–43 NACE code)—Construction;     G (45–47 NACE code)—Wholesale and retail trade and repair of motor vehicles and motorcycles;     H (49–53 NACE code)—Transporting and storage;     I (55–56 NACE code)—Accommodation and food service activities;     J (58–63 NACE code)—Information and communication;     K (64–66 NACE code)—Financial and insurance activities;     L (68 NACE code)—Real estate activities;     M (69–75 NACE code)—Professional, scientific and technical activities;     N (77–82 NACE code)—Administrative and support service activities;     O (84 NACE code)—Public administration, defence and compulsory social security;     P (85 NACE code)—Education;     Q (86–88 NACE code)—Human health and social work activities;     R (90–93 NACE code)—Arts, entertainment and recreation; or     S (94–96 NACE code)—Other services

6. Does the country use a specific SME definition for transfer pricing purposes? If yes, please briefly indicate the key points

7. Are there any specific measures used for SMEs? For example:     a. simplified transfer pricing documentation requirements     b. specific nature of a transfer pricing audit process     c. smaller penalties     d. specific nature of advanced pricing agreements     e. safe harbour rates (i.e., tax authorities predetermine the range of rates that can be used for specified transactions between SMEs)     f. the exclusion of SMEs from transfer pricing rules or others     g. others, or     h. none

8. With respect to the previous question, if you selected "others", please briefly specify the measure and address the key points

9. With respect to question No. 7, if there are not any specific measures for SMEs regarding transfer pricing in place, would you appreciate the introduction of some of these measures? Please indicate which one:     a. simplified transfer pricing documentation requirements     b. specific nature of a transfer pricing audit process     c. smaller penalties     d. specific nature of advanced pricing agreement     e. safe harbour rates (i.e., tax authorities predetermine the range of rates that can be used for specified transactions between SMEs)     f. the exclusion of SMEs from transfer pricing rules or others, or     g. others

10. Are you dealing with transfer pricing issues in your company? If not, please do not continue filling out the questionnaire

11. Are you using the services of a tax consultant for transfer pricing issues? If yes, please indicate for which of the following activities:     a. consideration of the most suitable transfer pricing method     b. preparation of the transfer pricing documents (local or master files)     c. preparation of the advanced pricing agreements     d. preparation of the country-by-country report     e. transfer pricing disputes     f. all tax matters, regardless of whether it is a transfer pricing issue     g. Other issues     h. no, I do not use this kind of service

12. Please estimate the time range necessary for managing transfer pricing issues (this includes the creation of relevant documents, translation of documents, consideration of transfer pricing methods, preparation of transfer pricing documents (master file or local file), completion of the country-by-country report as an annex of an income tax return and preparation of other documents).     a. Up to 50 h per year     b. 51–100 h per year     c. 101–200 h per year     d. 201–300 h per year     e. 301–500 h per year     f. 501–700 h per year     g. 701–900 h pear year     h. More than 900 h per year     i. I am not able to estimate

13. With respect to the previous question, please estimate the average costs per year related to this issue.     a. Up to EUR 1000     b. EUR 1001–2000     c. EUR 2001–3000     d. EUR 3001–4000     e. EUR 4001–5000     f. EUR 5001–6000     g. EUR 6001–10,000     h. EUR 10,001–12,000     i. EUR 12,001–14,000     j. EUR 14,000–16,000     k. EUR 16,001–18,000     l. EUR 18,001–20,000     m. EUR 20,001–22,000     n. more than EUR 22,000     o. I am not able to estimate

14. Please estimate the time necessary for considering the most suitable transfer pricing method.     a. Up to 24 h per year     b. 25–56 h per year     c. More than 56 h per year     d. I am not able to estimate

15. With respect to the previous question, please estimate the costs related to this issue.     a. Up to EUR 500     b. EUR 501–1000     c. More than EUR 1000     d. I am not able to estimate

16. Please estimate the time necessary for preparing transfer pricing documents. When doing the estimation, please take into account the time necessary for updating any transfer pricing documents.     a. Up to 100 h     b. 101–200 h     c. 201–300 h     d. 301–500 h     e. More than 500 h     f. I am not able to estimate     g. There is no obligation to prepare transfer pricing documents in our country

17. With respect to the previous question, please estimate the costs related to this issue.     a. Up to EUR 1000     b. EUR 1001–3000     c. EUR 3001–6000     d. EUR 6001–9000     e. EUR 9001–12,000     f. EUR 12,001–16,000     g. EUR 16,001–20,000     h. more than EUR 20,000     i. I am not able to estimate     j. There no obligation to prepare transfer pricing documents

18. If your enterprise has the obligation to complete a country-by-country report as an annex of an income tax return, please estimate the time necessary for its preparation.     a. Up to 24 h per year     b. 25–56 h per year     c. 57–96 h per year     d. 97–152 h per year     e. More than 152 h per year     f. I am not able to estimate     g. There is no obligation to prepare a country-by-country report

19. With respect to the previous question, please estimate the costs related to this issue.     a. Up to EUR 500     b. EUR 501–1000     c. EUR 1001–2000     e. More than EUR 2000     f. I am not able to estimate     g. There is no obligation to prepare a country-by-country report

20. Have you ever used an advance pricing agreement in your enterprise? If yes, please estimate the time necessary to prepare the advance pricing agreement. When doing the estimation, please take into account the time necessary for updating the advanced pricing agreement.     a. Up to 100 h     b. 101–200 h     c. 201–300 h     d. 301–500 h     e. More than 500 h     f. I am not able to estimate     g. I have never used an advance pricing agreement

21. With respect to the previous question, please estimate the costs related to this issue.     a. Up to EUR 1000     b. EUR 1001–3000     c. EUR 3001–6000     d. EUR 6001–12,000     e. more than EUR 12,000     f. I am not able to estimate     g. I have never used an advance pricing agreement

22. Do you think that the availability of complex information for SMEs regarding transfer pricing issues can be beneficial? If yes, would you prefer:     a. A website with general and specific information     b. Training materials         Technical manuals, etc.     c. I do not think that it would be beneficial

23. Would you appreciate communications with tax authorities in languages other than your country’s official language?     a. Yes     b. No     c. I do not know

24. Would you appreciate the option to submit a tax return in other languages?     a. Yes     b. No     c. I do not know

25. Would you appreciate the implementation of the common consolidated corporate tax base in the EU, which would introduce the concept of one-stop shop?     a. Yes     b. No     c. I do not know

26. Would you appreciate the introduction of transfer pricing guidelines for SMEs that considers the different approaches used for SMEs? If yes, do you prefer guidelines that are similar to the OECD Transfer Pricing Guidelines?     a. I do not think that it would be beneficial for SMEs     b. I think that it would be beneficial for SMEs, and I prefer similar guidelines     c. I think that it would be beneficial for SMEs, but I do not prefer similar guidelines

27. Would you appreciate the introduction of simplified transfer pricing documents for SMEs?     a. Yes     b. No     c. I do not know

28. Would you appreciate the exclusion of micro and small enterprises from the obligation to prepare transfer pricing documents?     a. Yes     b. No     c. I do not know

29. Would you appreciate the exclusion of micro and small enterprises from the obligation of transfer pricing issues?     a. Yes     b. No     c. I do not know

30. Would you appreciate the introduction of a simplified advance pricing agreement procedure for SMEs? (This could include simplified transfer pricing documentation requirements, no or reduced fees, a shortened verification process)     a. Yes     b. No     c. I do not know; I have never used the advance pricing agreement

31. Would you appreciate the introduction of smaller penalties for SMEs, particularly if SMEs are acting in good faith and are not able to supply the required documentation?     a. Yes     b. No     c. I do not know

32. Would you appreciate the introduction of a safe harbour range of rates for selected industries and types of transactions (i.e., manufacturer, distributor, or service provider; the system is currently applied in the case of low value-added services in the EU)?     a. Yes     b. No     c. I do not know

33. Would you appreciate the introduction of a safe harbour range of rates for the following transactions? Please indicate which one:     a. Loans     b. Royalties     c. Intangibles     d. Others—please specify     e. No, I do not think that it will be beneficial for SMEs

34. Would you appreciate the introduction of EU-comparable benchmarks for selected industries and guidelines covering the selection and use of data that are comparable to the EU and practices of other EU Member States?     a. Yes     b. No     c. I do not know