Shareholder fees are the costs associated with the provision of the shareholder`s activity. The OECD guidelines (July 2017, item 7.10) define shareholder activity as: the cost-benefit method is a method of determining the selling price of a product or service between associated parties. The objective is to establish a gross margin. However, in certain circumstances (for example. B, when it is difficult to find a comparable gross margin, but it is easier to establish a comparable net profit margin and for certain functions such as toll), the objective of the cost-benefit method is to determine the company`s net profit. In such a scenario, the real name of the method is the transactional net margin method (`TNMM) with a cost-plus indicator. Marie-Lise Swinne, corporate tax partner at Tax Consult in Belgium and head of the Transfer Pricing Services group, recently launched by Alliott Group, explains how this complex international tax approach applies in practice. If comparable internal transactions are not available, comparable external data can be used instead. This works by identifying several companies similar to the French producer and considering on average the gross cost of companies.
Another joint business-to-business transaction is business-to-business lending. Here, the British subsidiary is financed by the parent company. In such cases, it is important to ensure that there is an intra-company loan contract – this should include the interest rate to be paid and the terms of repayment of the loan. If there is no agreement, this can lead to future tax problems, in which financing can be considered by the authorities as an investment and not as a loan. The first step in applying this method is to determine the production costs borne by the supplier in the case of a controlled transaction (an in-house transaction between related companies). A market-based mark-up is then added to these costs in order to make a reasonable profit. (This is essentially the “plus” in the cost-plus method.) Intercompany agreements are contracts between two or more companies or divisions that are owned by the same parent company.