Therefore, the issues relating to advance-price contracts are resolved in the first place by the Finnish tax authorities. However, the Department of Finance may decide to resolve important policy issues. Within the Finnish tax administration, the tasks of the competent authority in the context of advance pricing agreements are carried out by the transfer pricing operations of the Grand Taxpayers` Office. Once we are familiar with your company, we will check to see if the methodology is appropriate and review the comparisons. Often, we look for comparables ourselves instead of simply accepting the equivalents offered in the application. We would also like to conduct a review using another methodology to see if the results are consistent and to provide an answer that supports the proposed methodology. At the request of the subject, all information necessary to resolve the case must be provided. The content of the required information varies from case to case. EU recommendations and OECD guidelines on transfer pricing provide guidance on the content of this information. In the statement, the subject must describe how the chosen transfer pricing method indicates that future transactions are accounted for along the length of the arms. The double taxation agreement is available on the website of the Federal Ministry of Finance.
It is recommended that APA be compiled as soon as possible. The time required to process the application must also be taken into account. In line with EU recommendations, the application should be processed within 18 months. In practice, processing times are much longer. This observation is based on EU statistics (which also contain unilateral APAs from individual states and preliminary decisions). The tax exercises covered by the APA are defined separately in the APA between the relevant authorities. AAAs – in the aforementioned sense – find their legal basis in the Double Taxation Conventions (DBA), in the respective articles on mutual agreement procedures. Germany has concluded DBA with more than 90 countries in the world.
Most of these DBAs follow the OECD`s draft international agreement. The provisions on mutual agreement procedures are set out in Article 25, paragraphs 1 to 3, of the OECD Model Convention. The appropriate authorities may agree that the subject is required to submit a notification after the APA. The subject may, for example, be required to notify the appropriate authority each year of compliance with the current APA. This reporting obligation is not related to the obligation to provide tax returns or the obligation to provide transfer pricing information, as it relates to a separate notification to the competent authority. The reporting requirement is part of the APA`s general conditions. When the subject is notified of the outcome of the negotiations, the competent authority also informs the subject of the issues for which the declaration is to be submitted and of the time frames for doing so. In October 1999, the OECD published an update of the OECD guidelines on clearing prices for multinational companies and tax administrations in 1995 (the so-called “guidelines”).