Regarding services from parent and other related parties, a distinction should be made between:
- Necessity to have documentation proving that these services were indeed created, as well as that they were performed for the purpose of performing business activities (documentation of services) and
- Analysis of such costs from the aspect of transfer prices where it is examined (justification of the price of the service):
- allocation of total costs to group members and
- the justification for adding a margin to the cost basis, the compliance of which is examined on an out-of-reach basis using appropriate transfer pricing methods that usually require the use of a commercial database
It often happens that companies are not aware of the importance of having relevant evidence that the services were actually provided. The existence of an agreement and invoice is often not enough to prove the credibility of the service.
Given the importance of the issue of procurement of intercompany services, it is necessary to pay attention to the general legal implications regarding cases of payments to non-residents.
According to the Law on Foreign Exchange Operations, Article 58, an individual who performs payment collection, who pays or makes payment request, i.e. pays the amount above 100.000 EUR to a non-resident, on the basis of a contract in which the real price is not disclosed or on the basis of false documentation, will be punished for criminal offence. Related to this matter, the main questions are ‘’Are these services really provided?’’ and ‘’How to prove that these services are really provided?’’. Therefore, it is necessary to conduct activities very carefully, so responsible persons do not get charged for the violation of law and criminal offence.
Our team of experts is ready to provide you support in ensuring that any type of these services is in accordance with relevant laws.