Application of arm’s length standard

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Main principle: When calculating taxes for each company within a group of companies (Tax Group), it's crucial to consider the "arm's length standard." This means treating each company as independent businesses, dealing with each other at normal market prices, not special related-party prices.

Fair pricing: If companies within the group trade at prices above or below market value, adjust the price to reflect what an outsider would pay (Article 34).

Services: Even for free services within the group, create a "paper" cost reflecting market value for fair tax allocation.

Shared expenses: When one company incurs a cost benefiting another within the group, consider it "passed on" if that reflects a normal business transaction.

Overall tax limit: The combined tax paid by all companies can't exceed the total tax owed by the entire group as one entity.

 Certain transactions ignored: If a transaction within the group doesn't impact taxes elsewhere (e.g., selling an asset within the group), ignore it for tax calculation purposes.

Asset/liability transfers: For tax purposes, treat transfers of assets or liabilities within the group as having no gain or loss, similar to how "Qualifying Group Relief" works (Article 26).

Remember: This is a simplified explanation, and consulting a tax professional for specific advice is always recommended.

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