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Transfer pricing

Transfer prices must be reviewed every year

Kristjan Järve Kristjan Järve

Many companies in the process of preparing annual reports for the last year find themselves facing the need to recognise transactions between related parties.

For annual reports filed to the Commercial Register, it is sufficient to disclose statistics on turnover as required in the section of the report on related parties. 
The tax authority expects detailed information on all significant categories of transactions with related parties. Above all, this pertains to transaction conditions, pricing and evidence regarding the conformity of transactions to market value. For this reason, groups of companies and other associations of related parties must regularly – each year – review and update their transfer pricing documentation.

This should be done even if transfer pricing documentation already exists from previous periods. Today’s business landscape is changing and developing rapidly and the systems developed and documented years ago may not correspond to the current transaction categories and conditions or reflect changes that have taken place in the organisation and its legal structure in the interim. The worst case scenario is that outdated transfer pricing documentation could result in a notice of assessment from the tax authority.

If an organisation that has dealt with transactions between related parties has not yet prepared the required documentation, the project should be tackled in the near future. The taxation period in Estonia is the calendar month, but in practice, tax authorities also accept changes made once a year. 

Once the initial work is done and the transfer pricing documents are compiled, an annual update is not very time consuming or costly, if outsourced.

Often it is possible to use international databases specially designed for the purpose of updating comparison data (for substantiating market value) – for example for testing the market value of profit margins and licensing fees for business domains and of other intellectual property.

One of the best-known databases is the Bureau van Dijk-administered TP Catalyst. This database is used actively by Baltic tax authorities as well. Grant Thornton Rimess’s tax advice department also has access to the database and we will be glad to help our clients prepare and update their transfer pricing documentation.


For more information, please contact our tax advisory department by e-mail at