Transfer Pricing policy review for a multinational automotive supplier

Objectives Review and adjust the transfer pricing policy to re-focus the group on profits and to mitigate tax exposure
Function Project manager directly reporting to the CFO / the management board
Countries Germany, The Netherlands, France, Spain, Czech Republic, Romania, Russia, China, Mexico
Industry Automotive
Profile The group develops, manufactures and sells automotive components as 1. or 2. tier supplier. It operates 13 entities with about 2.500 employees and generates annual revenues of € 300 Mio.
Fokus - Analysis of transactions, functions performed and risk assumed by entity (10 plants, 2 service companies)
- Develop, assess and implement a revised transfer pricing approach for tangible property, contract R&D and contract services including management presentations and discussions.
- Support various transfer pricing related tax audits and post merger integration activities
- Create a transfer pricing policy documentation (past)
Results The project identified improvement potential with respect to project management, cost accounting and product costing. A variable contribution margin approach replaced the total cost approach and improved make or buy decisions (objective: increase utilization of manufacturing capacity available. A standardized cost plus pricing for general services was implemented (Infor PM10 reporting system) to facilitate both, cost plus pricing as well as the two-sided benefit test. The tax exposure was reduced; management was re-focused on profits.
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