Transfer Pricing

Оглавление

Sebastian Schulz. Transfer Pricing

FOREWORD

EDITORS AND AUTHORS

1. Introduction – the arm’s length principle. 1.1. Description of the facts

1.2. Regulatory framework

1.2.1. Adjustment of income – domestic law (Germany)

1.2.1.1. Hidden profit distribution

1.2.1.2. Hidden capital contribution

1.2.1.3. Section 1 External Tax Relations Act

1.2.2. Double taxation agreement

1.2.3 UN Model

1.2.4 OECD Transfer Pricing Guidelines

1.3. Economic Principles

1.4. Further readings

2. The first step: Value Chain Analysis (Christian Schwarz and Stefan Stein) 2.1. Value Chain Analysis

2.2. Functional and Risk Analysis

2.3. Further readings

3. Transfer Pricing Methods. 3.1. Description of the facts

3.2 Discussion and solution (Katharina Becker)

3.2.1 Traditional transaction methods. 3.2.1.1. Comparable uncontrolled price method, CUP

3.2.1.2. Resale price method (RPM)

3.2.1.3. Cost plus method (C+-method)

3.2.2. Transactional Profit Methods. 3.2.2.1. Transactional Net Margin Method (TNMM)

3.2.2.2. Digression: US-Regulation, comparable profits method, CPM

3.2.2.3 Transactional profit split method, TPSM

3.2.3. Other methods. 3.2.3.1. Acknowledgement of the use of other methods

3.2.3.2 Hypothetical arm’s length comparison

3.2.3.3. Sixth method (Commodity Rule)

3.2.4. Application to the case

3.3. Further readings

4. Comparability Analysis. 4.1. Overview

4.2. Further readings

5. Supply of materials. 5.1. Description of the facts

5.1.1. Supply of materials – I

5.1.2. Supply of materials – II

5.2. Discussion and solution (Julian Maier)

5.2.1. Supply of materials – I

5.2.2. Supply of materials – II

5.3. Further readings

6. Intangibles. 6.1. Description of the facts. 6.1.1. Research and Development

6.1.2. Marketing, Brand und Firm Name

6.1.3. Marking Technology

6.2. Discussion and solution (Christian Schwarz und Stefan Stein)

6.2.1. Research and Development

6.2.2. Marketing, Brand and Firm Name

6.3. Marking Technology

6.4. Further readings

7. Services. 7.1. Description of the facts. 7.1.1. Manufacturing

7.1.2. Distribution

7.1.3. Implementation of an IT system

7.2. Discussion and solution (Felix Loose)

7.2.1. Manufacturing

7.2.2. Distribution

7.2.3. Implementation of an IT system

7.3. Further readings

8. Cost Sharing Arrangements. 8.1. Description of the facts

8.2. Discussion and solution (Felix Loose)

8.3. Further readings

9. Cost Contribution Arrangements. 9.1. Description of the facts

9.2. Discussion and solution (Stefan Greil)

9.3. Further readings

10. Business restructuring/transfer of functions. 10.1. Description of the facts

10.2. Discussion and solution (Stephan Rasch and Kerstin Dürrbeck)

10.2.1 Business restructurings/transfer of functions in terms of reason. 10.2.1.1 German regulations

10.2.1.2 OECD recommendations

10.2.2 Business restructurings/transfer of functions in terms of amount. 10.2.2.1 German regulations

10.2.2.2 OECD recommendations

10.2.3. Application of the German regulations to the case at hand

10.3. Further readings

11. Financial Transactions. 11.1. Description of the facts. 11.1.1. Intra-group loan

11.1.2. Cash pooling

11.2. Discussion and solution (Stefan Greil) 11.2.1. Intra-group loan

11.2.2. Cash pooling

11.3. Further readings

12. Tax challenges arising from the digitalisation of the economy. 12.1 Description of the facts. 12.1.1 Data delivery and analysis

12.1.2 Distribution via an online store

12.2 Discussion and solution (Stefan Greil)

12.2.1 Data delivery and analysis

12.2.2 Distribution via an online store

12.3 Further readings

13. Permanent Establishments. 13.1. Description of the facts

13.2. Discussion and solution (Eleonore Kaluza)

13.3. Further readings

14. Obligation to cooperate – Transfer pricing documentation. 14.1. Description of the facts

14.2. Discussion and solution (Lars Wargowske)

14.2.1. Obligation to cooperate in cross-border cases

14.2.2. Transfer pricing documentation

14.2.3. Duty to cooperate in a tax audit

14.2.4. Further readings

15. Country-by-Country Reporting. 15.1. Description of the facts

15.2. Discussion and solution (Sebastian Schulz)

15.3. Further readings

16. Litigation, dispute avoidance and resolution. 16.1. Description of the facts

16.2. Discussion and solution (Eva Greil)

16.3. Further readings

Further information

Отрывок из книги

The field of transfer pricing is perceived as extraordinarily complex and resembles a jungle of regulations worldwide in which only specialists know their way around, although in principle everything could be reduced to a globally unified standard: the arm’s length principle. According to this principle, cross-border business relationships between related parties or transactions between associated enterprises should be established as if they were conducted with a third party for tax purposes and thus for the allocation of taxation rights to different countries. Consequently, a market-conform action should be introduced into a multinational enterprise group, the economic unit of the group of companies should be partially ignored and the individual associated business units should be taxed on the basis of the separate entity approach. In order to ensure this, countries around the world have issued regulations. International standard setters such as the OECD or UN have drawn up extensive guidelines.

It was difficult for us to enter this world and we would have liked to have had a manageable and practical book to help us get started. In view of this background we want to offer an entertaining, practical and structured introduction to the transfer pricing world with this book, which provides a necessary orientation and guidance for both beginners and for those who have been working in this field for years.

.....

DTAs with developing and emerging economies are based primarily on the UN-Model, in which an article corresponding to Article 9 OECD-MTC has also been included as a basis for profit adjustments. The ALP is thus the generally accepted guiding principle in establishing an appropriate transfer price under Article 9 of the UN Model.

The UN Model contains provisions (Article 9 (3)) which stipulate that a Contracting State is not required to make the corresponding adjustment referred to in Article 9 (2) where judicial, administrative or other legal proceedings have resulted in a final ruling that, by the actions giving rise to an adjustment of profits under Article 9(1), one of the enterprises concerned is liable to a penalty with respect to fraud, or to gross or willful default.

.....