In most cases, identifying controlled transactions is straightforward. However, there may be instances where transfers occur between group companies without being recognised as transactions. This can occur, for example, during reorganisations or when intellectual property (IP) owned by one group company is utilised by another company without compensation. Refer to the section "Examples of situations where identifying transactions is challenging" for examples of such cases. Additionally, benefits within a group (synergies) may arise, which in some cases must be treated as transactions.

How to identify controlled transactions

To identify your controlled transactions, the following questions may be helpful:

• What goods and/or services do you sell or purchase?
• Who are your customers and suppliers?
• Which parties (entities) and countries are involved in the transactions?
• Is there a restructuring or reorganisation within the group? If so, what changes are involved?
• Are you starting to buy or sell new goods to or from other parts of the group?

Examples of transaction types

Transactions can occur in all parts of a business and may be recorded under various accounts. There are many types of controlled transactions, which we classify into the following main categories:

• Operational transactions
• Financial transactions
• Extraordinary transactions

It is also common to differentiate between controlled transactions that occur once (one-time transactions) and those that recur over a period (ongoing transactions). Below is an overview of the most common transaction types. The list is not exhaustive.

Operational transactions may include:

• Transfer of goods (raw materials, semi-finished products, and finished goods)
• Provision or receipt of services (marketing, accounting, IT, HR)
• Provision or receipt of services, such as research and development of new products
• Agreements on the use of other parties' tangible fixed assets
• Agreements on the use of other parties' intangible fixed assets (know-how, software, patents)

Financial transactions may include:

• Leasing of fixed assets
• Insurance of assets (captives)
• Loans and interest charges
• Guarantees
• Cash pool arrangements

Extraordinary transactions may involve:

• Restructurings
• Reorganisation of functions
• Transfer of operating assets – tangible fixed assets and intangible assets
• Reallocation of risk

Special considerations when identifying intangibles

You must identify whether you are using intangibles owned by related companies or whether related companies are using your intangibles.

The following questions may be helpful in assessing whether intangibles are being used in the transaction:

• Are you using a trademark/brand owned by a related company in the marketing of your own business?
• Is a related company using a trademark/brand owned by you in the marketing of its business?
• Are you using a patent owned by a related company in the production of goods?
• Is a related company using a patent owned by you in the production of goods?

Examples of situations where identifying transactions is challenging

Generally, you have an overview of the controlled transactions in which you participate. However, in some cases, it may not be clear that a transaction has occurred. The consequences of the original transaction may be unclear, and new transactions may have arisen that you need to identify and price. There may be instances where parties involved in the transaction do not receive payment for their contributions, even though payment should have been made.

Some examples of situations where identifying transactions can be challenging:

Reorganisation within the group

In a group reorganisation, functions, assets, and/or who bears the risk associated with the business may change. Many of these changes occur according to a specific plan and are easy to identify. However, it can be challenging to detect all the effects of the changes that have been implemented, and in these situations, transactions may arise that need to be identified in more detail.

Example:

Before the transaction:
Company A has developed intangibles through research, at its own expense and risk.

The transaction:
Company A enters into an agreement with Company B, which is given the right to conduct further research in the relevant area.

Company A will perform the research on behalf of Company B. In this example, Company A becomes a contract researcher going forward. It may be necessary to identify several transactions.

The transaction:
Company A enters into an agreement with Company B, which is given the right to conduct further research in the relevant area.

Company A will perform the research on behalf of Company B. In this example, Company A becomes a contract researcher going forward. It may be necessary to identify several transactions.

Acquisition cases

When a company is acquired, integration may occur where the parties utilise each other's assets. Transactions involving intangibles can be challenging to identify. In such instances, property may be shared and used without appropriate compensation.

Example:

The acquired Company A possesses an intangible (such as software) that is easily deployable across the entire group. It can be difficult to identify who is utilising the asset and the extent of its use. In practical terms, the intangible may become accessible to the entire group through a common digital platform, without the transaction being identified or the value of what is transferred being quantified.

Services

One of the advantages of being part of a large group is the access to a wide range of products and services within the group.

Example:

Company A supplies products to Company B. Alongside the product, there is a need for certain support services. The provision of such support services may be part of the product transaction, but it may also constitute a separate transaction that needs to be identified and described in detail.

Special considerations regarding synergies in intra-group relations

Group companies that collaborate can achieve advantages or disadvantages (synergies) that standalone companies cannot. The advantages or disadvantages that arise should be proportionately allocated to the group companies that contribute to creating the synergies. Synergies can occur because the group acts collectively or, for example, makes organisational choices that lead to cost savings or increased profits. Synergies can also arise when certain participants in the group act on behalf of the collective, thereby achieving synergies for the collective.

It is important to identify synergies in a comparability analysis. In some cases, synergies should be treated as transactions that need to be priced. This depends on the nature of the synergies and how they arise.

Synergies that occur when group companies perform deliberate and concrete activities may be transactions that you need to identify and price.