Transfer prices, what are they? How do they work? The transfer prices could be defined as the legal capacity that a company has to transfer the profits of a parent company to a subsidiary company (CFC) located in a tax haven or in a jurisdiction with a lower tax.
In order to carry out the best tax optimization, we have to choose well the destination country of our investment. Whether we are a company or a private individual, we must analyze in depth the opportunities, in terms of tax optimization, provided by tax havens and other territories free of taxes within the framework of current international legality.
If we talk about technological multinationals and their tax mathematics used to save on tax payment, we can not ignore the use of the two most frequent methods that in financial jargon are known as the Dutch sandwich and the Double Irish.
The incorporation of companies in the European Union with the purpose to carry out the VAT carrousel is penalized by the Tax Agencies. Any company registered in EU or outside of it should never be used for that purpose. Therefore we strongly recommend all our clients not to involve their companies in VAT carrousel.