{"id":11891,"date":"2025-04-07T10:16:47","date_gmt":"2025-04-07T07:16:47","guid":{"rendered":"https:\/\/gls-law.company\/?p=11891"},"modified":"2025-04-07T10:16:48","modified_gmt":"2025-04-07T07:16:48","slug":"should-transactions-under-agency-agreements-be-included-in-tp-reporting","status":"publish","type":"post","link":"https:\/\/gls-law.company\/en\/should-transactions-under-agency-agreements-be-included-in-tp-reporting\/","title":{"rendered":"Should Transactions Under Agency Agreements Be Included in TP Reporting?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Context:<\/strong><br>A Ukrainian company performs agency functions for a related non-resident (principal) \u2014 assisting in the sale of goods, without acquiring ownership of the goods. The agent receives only a commission fee for its services. However, the payment for the goods is first received into the agent\u2019s bank account and then transferred to the non-resident.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">\ud83e\uddfe <strong>What Does the Tax Authority Say?<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">(According to an Individual Tax Consultation from the Ukrainian Tax Service)<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A mediator without ownership rights is still considered to be participating in a controlled transaction.<\/li>\n\n\n\n<li>Even if the agent receives only a commission and no profit from the resale of goods, the mere fact that customer payments pass through the agent\u2019s bank account qualifies the transaction as a business operation.<\/li>\n\n\n\n<li>If the foreign company is a related party, the transaction between the agent and such a company is subject to analysis under the arm\u2019s length principle.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">\ud83d\udd0d <strong>What Does This Mean for Businesses?<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Companies acting as agents or intermediaries for related non-residents:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Must analyze<\/strong> such transactions for potential TP reporting obligations.<\/li>\n\n\n\n<li><strong>Are required to include<\/strong> these transactions in their transfer pricing documentation and justify the arm\u2019s length nature of the agent\u2019s commission.<\/li>\n\n\n\n<li><strong>Face significant penalties<\/strong> for non-compliance (e.g., fines up to 300 times the minimum wage for failure to submit the TP report and up to 5% of the transaction value for lack of documentation).<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">\ud83c\udfaf <strong>GLS Conclusions<\/strong><\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Even if you are \u201cjust an agent,\u201d do not ignore the transfer pricing implications of working with related non-residents. The tax authority\u2019s position is clear: the transfer of funds through your bank account constitutes a business transaction that falls under TP control.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context:A Ukrainian company performs agency functions for a related non-resident (principal) \u2014 assisting in the sale of goods, without acquiring ownership of the goods. The agent receives only a commission fee for its services. However, the payment for the goods is first received into the agent\u2019s bank account and then transferred to the non-resident. \ud83e\uddfe [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":11874,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-11891","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/11891","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/comments?post=11891"}],"version-history":[{"count":1,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/11891\/revisions"}],"predecessor-version":[{"id":11892,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/posts\/11891\/revisions\/11892"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media\/11874"}],"wp:attachment":[{"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/media?parent=11891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/categories?post=11891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gls-law.company\/en\/wp-json\/wp\/v2\/tags?post=11891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}