Ask an expert: Definition of SMEs for transfer pricing purposes

Question: I am trying to establish whether my client company A is small medium or large for the purposes of the UK transfer pricing rules. It has two subsidiaries B and C. It holds 75% of the issued share capital and voting rights in both companies. Company B also has a 38% stake in company D. Company A also a 30% stake in company E which in turn has a 28% stake in company F. In applying the financial and headcount tests to company A which companies’ figures should I include and how much of each?

Answer: Although the 2003 EC recommendation (2003/361/EC) amending the rules for determining SMEs is not entirely clear the guidance notes and in particular the examples and appendix I clarify the position.

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