Transfer pricing refers to the terms and conditions surrounding transactions within a multi-national company. It concerns the prices charged between associated enterprises established in different countries for their inter-company transactions, i.e. transfer of goods and services. Since the prices are set by non independent associates within the multi-national, it may be the prices do not reflect an independent market price.

This is a major concern for tax authorities who worry that multi-national entities may set transfer prices on cross-border transactions to reduce taxable profits in their jurisdiction. This has led to the rise of transfer pricing regulations and enforcement, making transfer pricing a major tax compliance issue.

“Transfer pricing is not, in itself, illegal or necessarily abusive. What is illegal or abusive is transfer mispricing, also known as transfer pricing manipulation or abusive transfer pricing,” says the Tax Justice Network.

In recent years, TP has become a key area of international taxation facing multinational enterprises and tax administrations.

TP requirements mainly apply to cross-border transactions. If a multinational group enters the Latvian market, e.g. by establishing, merging or acquiring a Greek subsidiary or creating a permanent establishment (PE) in Greece, and that subsidiary or PE makes transactions with other group companies (or with any other persons such as family members or significant individual shareholders), the prices applied in those transactions may directly affect how the profit or loss of related parties is measured, and it is important to disclose how those prices are set in practice.

So the transfer prices of a multinational group with a taxable presence in Greece are governed by Greek tax laws.