Central and Eastern Europe (CEE)

OECD Base Erosion and Profit Shifting recommendations – namely, the new formal transfer pricing documentation standards consisting of Country-by-Country-Reporting, Master File and Local File – are being rolled out across the CEE/SEE region. The pace and the intensity of the tax authorities’ approach and actions in the CEE/SEE jurisdictions differ. However, even though some jurisdictions may currently be considered less risky than others, businesses need to be prepared to defend their transfer pricing strategy under the new increased transparency.

Internationally coordinated documentation, mandatory disclosure and the focus on value chain analysis in the documentation have changed the perception of transfer pricing and increased the complexity of the practical application of the rules. Now, more than ever, it is essential to align transfer prices with the value creation within the group which requires a combination of sound tax and industry knowledge to effectively manage transfer pricing risk. Sooner rather than later all tax authorities will use the better access to corporate information in transfer pricing cases as a means to increase tax revenues.