Transfer Pricing in the European Union Context

Abstract

The practice of transfer pricing for the purpose of fiscal optimization has become the center of attention in recent years due to the negative impact it has on the tax base, the state budget and competition. In this paper, we analyzed the functioning of transfer prices from two points of view, the value of fiscal optimization and the value of the market. The purpose was to determine the key indicators that address transfer prices in order to optimize the tax to come up with recommendations that could inhibit this practice. The results of the paper showed that the indicators are sales revenue, tax level and profit. So, the proposed recommendations considered the three indicators and the main recommendation regarding the profit involves the taxation of profit at the level of the value that would be realized under the conditions of the sale at the market price.

Keywords

• transfer pricing
• multinational companies
• profit shifting
• european union