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Text Transfer Pricing
Solutions Limited 2004-7
On-line tool: Step 3 - Members of the group

Broad consequences

The main consequences of the specific rules (explained in more detail below) are:
  • No matter how small a company may be, it cannot benefit from the exemption unless its entire worldwide group (subsidiaries, sister companies, parents, and ultimate majority shareholders) meets the thresholds on a consolidated basis.
  • No matter how far an individual is below the thresholds on a personal basis, they may not be exempt if they exceed the thresholds when combined with any company they control.
Once you have determined the taxpayer's group, using the guidance below, click here to continue with Step 3.

The rules

The rules for determining the taxpayer's "group" for the purposes of measuring whether the taxpayer is small are based on a recommendation by the EU Commission.  They are complex and perhaps a little ambiguous, but we will concentrate here on the meaning in 'plain vanilla' situations.  The full rules are in Annex C of the document that can be viewed/downloaded here.

In most cases, the starting point is going to be either the taxpayer's own accounts or, if they exist, the "consolidated accounts in which the enterprise is included through consolidation".  If the taxpayer is a company, this appears to mean the consolidated accounts of the taxpayer's ultimate parent company.

To this must be added the data for:
  • Linked enterprises - explained here
  • Partner enterprises - explained here


The EU definition refers to enterprises.  More about the meaning of this term is here.

Business creation investment

Certain business creation investors are excluded.  Click here to learn more.

Continue with Step 3

Click here.

The 'small print'

The comments on this page and elsewhere on this website are of a general nature.  It is not practicable in a general review such as this to consider every convolution of the UK transfer pricing rules or of any other tax law that may be relevant.  Moreover, these pages naturally do not take into account the specific facts relating to any particular taxpayer.  Therefore, although the guidance in this website should give a good indication of the likely position under the transfer pricing rules, taxpayers should obtain professional advice to verify the position, or carry out their own analysis.

Neither TPS nor its affiliates and employees make any representation regarding the completeness or accuracy thereof and they accept no responsibility for any loss or damage incurred as a result of any user acting or refraining from acting upon anything contained on these pages or upon its omission therefrom.
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