Report and document transfer pricing information

Some large multinational groups are obliged to submit a Country-by-Country report (also called CbC-reporting). This duty of disclosure applies to groups with a consolidated revenue exceeding NOK 6.5 billion per year. The ultimate parent company must submit a country-by-country report within 12 months after the end of the financial year.

The report contains information on income and taxes by country, as well as a description of the activity in each country and the individual enterprise in that country.

Read more about Country-by-country reporting.

Language

The documentation can be submitted in Norwegian, Swedish, Danish, or English.

Duty of custody

You have an obligation to store the documentation for a minimum of 10 years after the taxation period.

Alternative submission

The company can choose to prepare transfer pricing documentation in accordance with the relevant EU regulations. Companies that are part of a European group can use similar documentation prepared pursuant to EU regulations.

Such documentation should have the same content and scope as required by the Tax Administration Act.

Deadline for submitting transfer pricing documentation

When the Tax Administration request transfer pricing documentation, you must submit this within 45 days.

Transfer pricing documentation in accordance with international rules

The documentation requirements in the Tax Administration Act and associated regulations are based on the OECD guidelines. The guidelines are part of Norwegian legislation, see section 13-1 of the Taxation Act.

The guidelines explain in detail what the transfer pricing documentation must include. The guidelines classify the documentation into three parts:

• Master file
• Local file
• Country-by-Country reporting (CbCr)

The local file is equivalent to the Norwegian transfer pricing documentation. The master file must be included if the local file does not fully cover the relevant information.

Sections 8-11-3 to 8-11-12 of the Tax Administration Regulation set out requirements for the documentation. If the documentation is extensive, you need to make a summary of the key points. The information you’re required to include in the transfer pricing documentation is largely the same as the information and descriptions required for the comparability analysis.

There are no formal requirements for the structure of the documentation. To give us the best possible overview, we recommend that you first describe the general conditions before you give a more detailed description of the specific conditions. for the group, the company, and the controlled transactions. The documentation should include the following topics:

Describe external factors:

• Which external factors impact your enterprise, for example, rules, regulations, political conditions, economic cycles etc.

Describe the business and market:  

• Characteristics of the market for your products/services and the participants in your market.
• Competitive factors, such as the important value drivers and the economic cycles of your market.

Describe the group:

• The group’s legal structure, including ownership and formal decision-making authority, and the geographic locations of the subsidiaries, for example, using an updated organisational chart.
• The organisation of the group's operations. Include an overview of the operational structure and the various fields of business.
• The historical development of the group, the business and, if applicable, restructurings of the group.

Describe the company:

• The organisational structure and changes in the company.
• The value chain of the company, and how the company contributes to the value chain of the group.

General description of the controlled transactions:

You should describe:

• Each controlled transaction you’ve been involved in during the period covered by the transfer pricing documentation.
• The nature of the transactions.
• The scope of the transactions.
• The counterparty/counterparties in your controlled transactions.

Similar, closely linked or continuous transactions can be described together. We refer to this as aggregation of transactions.

Example: A Norwegian company provides both software and software support to an associated enterprise in country A. Although they’re two separate transactions, they’re closely linked and may be described together.

You should describe your controlled transactions in accordance with the OECD Transfer Pricing Guidelines. This means describing the characteristics of the assets or services, functional analysis (FAR analysis), contractual terms, financial circumstances (market analysis), and business strategies that may impact the pricing.

Transactions or other arrangements that require a more detailed description

You should describe the centralised services you receive. Centralised services refer to services provided by one entity of a group for the benefit of one or more entities in the group. For these services, you should describe:

• The type of service, for example, technical, administrative, or financial.
• The expected benefit of the service for the recipient.
• Whether you’ve used direct or indirect invoicing.
• The cost base of the service.
• If the indirect-charge method is used, which allocation key do you use?
• The applied mark-up or the reason for not applying a mark-up.

Example: If a subsidiary receives accounting services from the parent company and thereby do not need an accounting function, the subsidiary has benefited from those services.

Example: If a subsidiary uses marketing materials developed by the parent company, the subsidiary has benefited from those services.

Information on cost contribution arrangements

When your company takes part in transactions where it shares costs with associated enterprises (cost contribution arrangements, CCAs), you should explain these in more detail.

Information about assets that need a distinct description

Companies that own intangible assets relevant to controlled transactions should describe these. You should explain:

• Who owns the intangible assets.
• Who contributes to the development, enhancement, maintenance, protection, and exploitation (termed as DEMPE) of the intangible assets.

Information on the method used to set the price of a transaction – transfer pricing method

Describe:

• Your choice of transfer pricing method.
• Your reason for selecting this transfer pricing method.
• Why you consider the price to be in accordance with the arm's length principle.

You should consider whether the chosen transfer pricing method is consistent with the methods and principles described in the OECD Transfer Pricing Guidelines (Chapters II and III).

The documentation should include a comparability analysis

The transfer pricing documentation should include an analysis of the transaction, a comparison of the transaction with uncontrolled transactions, and your choice of transfer pricing method, see comparability analysis.

Scope of the documentation

Adjust your documentation to the scope of the transactions. Individual transactions that have a modest financial extent and are not part of the group's core activities are considered irrelevant. You do not need to document irrelevant transactions, but you should still report them under the correct topic in the tax return.

Attachments to the transfer pricing documentation

The documentation should contain all agreements:

• that have an impact on the price and other terms in controlled transactions.
• on the pricing of controlled transactions between the company and associated enterprises, entered into with authorities in other countries.

You should also attach advance rulings on transfer pricing obtained by the group from a foreign tax authority, that impact the pricing of the company's transactions.