The invoicing of intra-group services poses many challenges for multinational companies. Above all, the challenge lies in proving the arm's length nature and appropriateness of the costs charged. For this reason, tax authorities are always making findings in the course of external audits. Low value-added services (LVAIGS) in particular require an efficient and standardized method of cost allocation, as it is even more difficult to provide evidence in this case. The OECD's LVAIGS concept offers a framework for this that reduces administrative expenses and facilitates compliance with tax regulations. This paper analyses how the LVAIGS concept differs from other allocation methods, what advantages it offers and what challenges and risks are associated with it. The thesis begins with the introduction. This explains the problem, objectives and structure in detail. The main content then begins with a chapter on the (legal) foundations of transfer pricing. This is followed by the chapter on transfer pricing of services in terms of reason and amount. Requirements for the documentation of service charges are also explained. Once this chapter has described all the basic principles for the charging of services, the next chapter focuses on LVAIGS. In particular on the LVAIGS concept, which was introduced by the OECD and anchored in the guidelines. The work is rounded off with a case study. The work ends with the conclusion and outlook. Legal methodology is used to answer the research questions. Furthermore, the research questions are elaborated and answered by researching tax law literature and case law. Specialist books, journals, guidelines and decrees are used as a basis. The OECD publications, in particular the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022 (OECD-VPL 2022), are also an important part of the elaboration process. Information from the Austrian transfer pricing guidelines (VPR 2021) and the EU joint transfer pricing forum is also used. The bachelor's thesis concludes with a case study on the offsetting of services. This case study uses an anonymized practical case to illustrate how various services are incorporated, when services with low value added (LVAIGS) occur and how these services should be charged. The elaboration shows that the LVAIGS concept offers clear advantages, including the reduction of administrative expenses and the simplification of offsetting, e.g. through a standardised profit mark-up. This facilitates traceability and acceptance by the tax authorities. The precise definition of documentation requirements, which was enshrined in the OECD VPL 2022, also leads to greater transparency with regard to documentation. However, the standardised application of the profit mark-up and the potentially different interpretations by tax authorities harbour certain risks and challenges. Proper and comprehensive documentation is essential to ensure that the concept is recognised. Overall, the LVAIGS concept offers an efficient solution for the charging of low valueadded services, but requires careful consideration and customisation to the specific conditions of the company
Date of Award | 2024 |
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Original language | German (Austria) |
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Supervisor | Marina Luketina (Supervisor) |
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Konzerninterne Verrechnung von Dienstleistungen: Verrechnung von low value-adding intra-group services
Kropfreiter, N. (Author). 2024
Student thesis: Bachelor's Thesis