Small and medium sized enterprises (SMEs) and transfer pricing

Abstract

Small and medium sized enterprises have very important position in the EU economy, mainly in the area of growth and employment. However, most of SMEs are active only in their home country and only a few of them participate in cross-border activities. Furthermore, their activities in the internal market are limited by great deal of obstacles, mainly in the form of different tax systems which generate excessive compliance costs of taxation and the existence of different SMEs definitions for various purposes in Member states. In addition, from the view of the international taxation issues, the most important obstacles can be considered a transfer pricing and cross-border loss compensations. In this area, SMEs are facing specific problems and have specific needs. The aim of the paper is to analyze and evaluate the specific transfer pricing issues of SMEs and propose recommendations for them.