On 4 December 2017, the Austrian Finance Ministry published information on the Transfer Pricing Documentation Act, including specifications of the Master and Local File in Austria.
The additional information of the Austrian Finance Ministry (BMF) clarifies the interpretation of doubtful questions of the Documentation Act (VPDG) and the ordinance issued thereto (VPDG-DV). The report on BEPS Action 13, the EU Mutual Assistance Directive and the OECD Guidelines for the Implementation of CbC-Reporting should be used as a supplement.
No obligation for a Master and Local File in Austria if threshold is not exceeded
The BMF information mainly deals with questions regarding the CbCR. However, we have limited ourselves below to clarifications regarding the Master and Local File in Austria:
- Sales revenue: The Master and Local File in Austria are to be prepared if the sales revenue of the Austrian group of companies has exceeded the amount of EUR 50 million in the two previous financial years. The term “sales revenue” is based on the definition of the Austrian Commercial Code (UGB) or comparable accounting principles.
- Other documentation requirements: For business units that do not exceed the thresholds, there is no obligation to adhere to the prescribed structure under VPDG and VPDG-DV.
- Relationship with the EU Code of Conduct: The implementation of the Master and Local File in Austria complies with OECD and EU guidelines and should be understood as a national “minimum standard”.
- Transmission of copies: In the case of a request for the transmission of the Master and Local File in Austria, the required copies are to be attached (unsolicited).
- Materiality: The characteristic of materiality can only be determined on a case-by-case basis from the overall picture of the circumstances.
- Level of detail of the information: The benchmark is the diligence of a proper and conscientious manager.
The whole Master File must be available in each state
The BMF information contains following specifications regarding the Master File:
- Description of business: In the case of a presentation according to business lines, the entire Master File with all business lines must be available in each state. It is not permissible to include only those business units that have an international connection.
- Presentation of the supply and service chain: The five largest products or services offered are measured by turnover. Group turnover is decisive, which is why a consolidated result is to be assumed.
Intra-group transactions in the Local File
The clarifications regarding the Local File are as follows:
- National transactions: Purely national intra-group transactions are usually not documented in the Local File.
- Business transactions to be documented: Only material intra-group business transactions are to be documented.
- Amount of payments: The information can be delivered not only on a payment basis but also on a transaction/business transaction basis. In the case of bookkeeping according to the principle of realisation, the concept of “payments” should be understood in the same way as for the principle of realisation.
- Financial information – financial statements: With regard to the financial data used for the application of transfer pricing methods (OM data, gross profit, cost plus), it must be documented to what extent these financial data are based on the annual financial statements. When presenting the breakdown for the profit split, it must be clear at which point in the annual financial statements the financial data used for the application of the transfer pricing method can be found.
If you would like to know more about the Transfer Pricing Documentation Act and exact regulations of Master and Local File in Austria, please visit the homepage of ICON Austria!
WTS Klient Hungary is a member of the WTS Global transfer pricing consulting team. As a member of this team we endeavour to find solutions to seemingly impossible problems with the help of personal contacts, regular training and consultations, and relying on the WTS Global central TP team. Should you have questions we are happy to assist you:
WTS Global Transfer Pricing Newsletter #1/2018