TTM13300 | Partnerships: The ring fence

Transfer pricing

The transfer pricing provisions described in TTM07300 will apply to certain transactions between a partnership and its partners if that partnership includes both a tonnage tax partner and a non-tonnage tax partner.

Transactions with tonnage tax partner

The transfer pricing rules will apply to transactions between a tonnage tax company and a partnership if:

• that tonnage tax company is a ‘major participator’ in the partnership, and

• the partnership also includes a non-tonnage tax partner who is also a ‘major participator’.

Transactions with non-tonnage tax partner

The transfer pricing provisions will also apply to transactions between a non-tonnage tax company and a partnership if:

• that non-tonnage tax company is a ‘major participator’ in the partnership, and

• the partnership includes a tonnage tax partner who is also a ‘major participator’.

Major participator

The definition of ‘major participator’ is in TIOPA10/S160 (3) to (5). Broadly, the effect of this is that two partners will be major participators in a partnership if they each have at least a 40% interest.