Introduction

Abstract

This chapter presents a brief overview of the importance of small and medium-sized enterprises (SMEs) and highlights their key role for the EU economy and the major economic issues and obstacles they are facing. SMEs occupy a very important position in the EU economy, mainly in the area of growth and employment. However, the group of SMEs in the EU is very heterogeneous and differs significantly from large enterprises (LEs). Not only do they differ in size, but they also perform different activities, have different needs and require different resources. Currently, SMEs already face special rules in the area of accounting and financial reporting in comparison with LEs; however, SMEs also face specific problems and have specific needs in the area of practical international taxation issues. As studies show, SMEs face higher compliance costs of taxation in the internal market, compliance costs connected with transfer pricing and the problem of accessibility of cross-border loss compensation. Taking into account the existing environment in which SMEs are operating, this book provides a deep analysis of SMEs’ compliance costs with respect to transfer pricing. Based on the results of empirical research, this work presents the critical concerns; however, the book also presents suggestions on simplifying transfer pricing rules for SMEs. This book is the result of a 3-year project (No. 15-24867S “Small and medium-sized enterprises in global competition: Development of specific transfer pricing methodology reflecting their specificities” granted by the Czech Grant Agency.