Related-party transactions (transfer pricing) – Part 3: Classification of related-party transactions and the principle that substance determines form.

The above-mentioned affiliated parties are specifically defined as follows:

a) One business directly or indirectly holds at least 25% of the owner's equity of the other business;

b) Both businesses have at least 25% of their owner's equity held directly or indirectly by a third party;

c) One enterprise is the largest shareholder in terms of owner's equity and directly or indirectly holds at least 10% of the total shares of the other enterprise;

d) An enterprise guarantees or lends capital to another enterprise in any form (including third-party loans secured by related-party financing and similar financial transactions) provided that the loan amount is at least 25% of the owner's equity of the borrowing enterprise and accounts for more than 50% of the total value of the borrowing enterprise's medium and long-term debts;

e) An enterprise designates a member of the executive board or controlling entity of another enterprise, provided that the number of members designated by the first enterprise accounts for more than 50% of the total number of members of the executive board or controlling entity of the second enterprise; or a member designated by the first enterprise has the authority to decide on the financial or operational policies of the second enterprise;

f) Two businesses have more than 50% of their board members or have a board member with the authority to decide on financial or business policies designated by a third party;

g) Two businesses are managed or controlled in terms of personnel, finance, and business operations by individuals who are related to one of the following: spouse; biological parents, adoptive parents, stepfather, stepmother, parents-in-law; biological children, adopted children, stepchildren of the spouse, daughter-in-law, son-in-law; siblings with the same parents, half-siblings, half-siblings; brother-in-law, sister-in-law, daughter-in-law, son-in-law of a person with the same parents or half-siblings; paternal grandparents; grandchildren; aunts, uncles, and nieces/nephews.

h) Two business establishments have a head office and permanent establishment relationship, or both are permanent establishments of a foreign organization or individual;

i) Businesses that are controlled by an individual through that individual's capital contribution to the business or direct participation in its management;

j) Other cases in which one enterprise is subject to the actual management, control, and decision-making power over the production and business activities of the other enterprise;

k) The enterprise has transactions involving the transfer or acquisition of at least 25% of the owner's capital contribution during the tax period; borrowing or lending at least 10% of the owner's capital contribution at the time of the transaction during the tax period with individuals managing or controlling the enterprise or with individuals in a relationship as stipulated in point g of this clause.