Give an expert opinion on the transfer prices of a major Japanese OEM for cars and P&A

ObjectivesDefend the transfer prices for cars and associated P&A of a major Japanese OEM s national sales company
FunctionResponsible for conducting the outside evidence work and writing the respective part of the report
CountriesThe Netherlands
ProfileThe Japanese OEM used a network of wholly owned national sales companies to sell passenger cars and associated P&A to the European market. The Dutch tax authorities challenged the transfer prices as not at arm s length and determined a material profit adjustment.
FocusA detailed functional and risk profile (including in-dept financial analysis of both, P&L and B/S) was established.
A European search for resale price comparables was conducted, accounting reclassifications and functional adjustments were identified and determined.
Functional interviews with comparables were conducted to properly apply the resale price method (gross margin approach).
ResultsThe study demonstrated that the transfer prices were at arm s length. The court finally accepted the underlying reasoning.

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