Transfer Pricing in Tax Audits
Once cross-border intercompany dealings exist, transfer pricing becomes a standard audit focus.
In practice, the outcome is rarely decided by theory alone. It is decided by procedure and evidence.
What matters in the audit
In an audit, the decisive questions are usually procedural:
What must be provided, how quickly, and in a form that is auditable and consistent.
The critical risk is not only a methodological re-assessment, but an estimated adjustment driven by documentation gaps.
Cross-border cases add a practical constraint: key documents, people and information are often located abroad.
If information cannot be produced in time or in a usable form, the case shifts from “method” to “verifiability”.
- Information requests and document production across borders
- Heightened cooperation duties in foreign fact patterns
- Burden of proof and substantiation before rejection of the taxpayer position
- Documentation quality: timeliness, consistency, audit-readiness
- Strategy when an estimate or broad adjustment is threatened
The practical consequence is often a broad profit adjustment affecting multiple years.
Without a corresponding correction on the other side, double taxation arises.
Transfer pricing in an audit therefore always has an international dimension: enforceability abroad, corresponding correction, and one coherent line across jurisdictions.
Procedural strategy, documentation and cooperation line, response to threatened estimates,
and steering the cross-border impact so that Germany and Switzerland remain consistent.
- How can a corresponding correction realistically be achieved in the other state?
- Which facts must be secured early to keep options open?
- Is a mutual agreement procedure necessary, or avoidable?
- Which line must not contradict internationally?