Posted: 11 Nov. 2021 6 min. read


Following our article on the publication of the Austrian Transfer Pricing Guidelines 2021 (TPG 2021), we continue our series on the TPG 2021 with the main changes to the chapters on the legal basis and on the methodology of transfer pricing.

Requirement of written contracts

In light of the High Administrative Court's ruling on “agreements between relatives”, the tax authorities and practitioners have so far always assumed that all contracts between related parties must be concluded in written form. This written form requirement is now softened up in the TPG 2021 to the extent that it is clarified that, in the now published view of the tax authorities, for intra-group transactions for which no contracts exist, the material contractual terms can also be derived from the actual conduct of the parties involved, provided that third parties would also not conclude written contracts for such transactions.

However, this amendment should by no means be seen as a carte blanche to no longer conclude written contracts within the group, but rather clarifies that it may be permissible in certain situations not to conclude written contracts. In some industries, for example, it is customary not to complete formal contracts for certain transactions, but to complete businesses only by telephone orders or orders via email. If this is practiced between third parties in such a way, it may also be permissible, in the opinion of the tax authorities, to settle contracts of this kind within the group. In practice, however, it is still recommended to conclude formal contracts for all intra-group transactions for documentation purposes.

Grouping of similar business transactions

For the first time, the TPG 2021, with reference to the OECD TPG, explicitly comment on the grouping of similar business transactions. In principle, all transfer pricing methods are only to be applied on a transaction-by-transaction basis, although similar transactions may be grouped together for documentation purposes. The TPG 2021 cite the distribution of electrical equipment as an example of grouping of similar transactions. Therefore, in the view of the tax authorities, it may be appropriate to apply the respective transfer pricing method used for the entire business transaction "distribution of electrical equipment" instead of further subdividing the electrical equipment for documentation purposes (e.g. separate documentation of each type of electrical equipment or even each model). In practice, it will have to be assessed on a case-by-case basis whether certain business transactions can be considered comparable or not.

In the TPG 2021 it was also clarified that the application of a single method to the total net profits of a group company from different business lines (e.g. sales and production) is not permitted.

Year-end adjustments

The updated version of the TPG takes a position on transfer pricing adjustments (e.g. year-end adjustments or compensating adjustments) between associated companies. In principle, these are viewed critically, as unrelated third parties will normally not agree on measures to adjust the result of an independent contracting party. The TPG 2021 therefore give preference to conscientious monitoring of the transaction during the year, which prevents the need for adjustments in the first place.

Adjustments may be made at the end of the year from the following points of view:

  • the price-determining factors are agreed in advance,
  • ex ante pricing is subject to significant uncertainties (for example, with regard to turnover figures and operating expenses or in the event of fluctuations in production capacity utilization), and
  • the taxpayer has made reasonable efforts during the year to achieve an arm's length transfer price (intra-year monitoring).

However, such adjustments are only permissible within a range - determined with ex-ante knowledge.

Control over risk

The TPG 2021 also adopted the concept regarding the analysis and allocation of risks from the OECD TPG. Essentially, this concept states that risks are to be allocated to the company which actually exercises the corresponding control and risk minimization functions, which affects the positive and negative consequences of the risk development, and which also has the financial capacity to bear the corresponding risk. In line with the OECD TPG, the TPG 2021 also clarify that ongoing risk mitigation activities may, however, be outsourced.

The background to the control-over-risk concept now adopted is that this is intended to limit the artificial shifting of risks and thus also the shifting of profit potential through intra-group agreements. Since it is primarily no longer the contractual agreements that are decisive for the allocation of risks, but rather the personnel and technical capacity to be able to make these risk decisions, as well as the financial capacity to also be able to bear the risk should it come to fruition.


In summary, it can be stated that the TPG 2021 primarily aligns with the OECD TPG in the areas of legal basis and transfer pricing methodology. The changes presented in this article are only those that appear to us to be most significant for business practice and therefore do not represent an exhaustive list of all changes. 

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Stefan Käppl, LL.B. (WU)

Stefan Käppl, LL.B. (WU)

Assistant Steuerberatung | Deloitte Österreich

Stefan Käppl ist in der Steuerberatung bei Deloitte Wien beschäftigt. Seine Tätigkeitsschwerpunkte liegen im Bereich der Verrechnungspreisunterstützung.