AUSTRIA Law and Practice Contributed by: Raphael Holzinger, Julia Hochreiter, Matthias Jancura and Claudia Synek, Grant Thornton Austria
if they are part of a consolidated multinational group of companies – ie, if they have the same shareholder with a stake of more than 50% and if at least one enterprise of the group is locat - ed outside Austria. Each transaction between associated enterprises is defined as a controlled transaction. However, it should again be noted that transactions between non-affiliated parties (ie, those lacking a joint controlling interest of more than 50%) are required to adhere to the arm’s length principle. These transactions are not subject to the TPDA but might be subject to documentation requirements in light of the FFC. 3. Methods and Method Selection and Application 3.1 Transfer Pricing Methods Neither the TPDA nor any other Austrian tax act explicitly lists specific transfer pricing methods. However, the ATPG catalogue the transfer pric - ing methods according to the OECD Guidelines. According to the principles of the ATPG, the most appropriate pricing method should be selected on a transaction-by-transaction basis, providing the most reliable measure of an arm’s length result in each case. The prevailing OECD methods – namely, the comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split methods – are all recog - nised. However, it is essential that the chosen method is aligned with the entity’s functional and risk profile. The application of alternative meth - ods is permissible, provided that they are justifi - able and appropriate. 3.2 Unspecified Methods As stated in 3.1 Transfer Pricing Methods , the application of alternative methods is permissible according to the ATPG, provided they are justifi -
able and appropriate, as outlined in the OECD Guidelines. 3.3 Hierarchy of Methods There is no established hierarchy, as the ATPG aligns with the OECD Guidelines. However, in practice, “natural hierarchy” tends to favour the comparable uncontrolled price method (if rea - sonably applicable). This can also be deduced by the sequence in which the transfer pricing methods are enumerated in the ATPG. 3.4 Ranges and Statistical Measures Ranges or statistical measures are generally authorised by the ATPG, so long as these are justifiable and appropriate. 3.5 Comparability Adjustments Year-end adjustments (YEAs) are typically regarded as a contentious financial practice and are only permitted under specific conditions. It is generally recommended that taxpayers adhere to the ex ante approach when determining their pricing with associated enterprises. This is due to the fact that third parties are unlikely to con - cur with subsequent price adjustments aimed at aligning the result of a contractual partner with a desired target value. It is therefore advisable to undertake year-round monitoring and make the necessary price adjustments. However, a YEA might be deemed at arm’s length if, for instance: • the price-determining factors are agreed in advance; • the ex ante pricing is subject to significant uncertainties; or • reasonable efforts have been made by the taxpayer during the year to achieve an arm’s length transfer price (monitoring during the year).
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