OECD Consultation Transfer Pricing Aspects of Business …

[Pages:12]OECD Consultation Transfer Pricing Aspects of Business Restructurings

Examples

RSM Richter Chamberland LLP is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.

RSM Richter Chamberland S.E.N.C.R.L. est un cabinet ind?pendant membre de RSM International, association de cabinets ind?pendants d'expertise comptable et de services conseils.

RSM Richter Chamberland S.E.N.C.R.L./LLP Division

Paris, June 2009

Example A ? Conversion of a full-fledged distributor into a "risk-less" distributor

MNE Co. Z

Tradename

Contracts

Retail Points

Co. V

Co. W

Co. X

1

Example A ? Conversion of a full-fledged distributor into a "risk-less" distributor

Co. V (Tradename)

Co. W (Contracts)

Co. X (Real estate)

Commissionaire

Co. Z

Acquiring group's business model

FMV payment of transferred assets

Business purpose to align business model

"Routine" controlled profits

2

Example A ? Conversion of a full-fledged distributor into a "risk-less" distributor

Factors considered:

? Existence of bona fide business purpose for restructuring ? Sale of "crown jewels" is not commercially logical? ? Consideration of group perspective

3

Example B ? Transfer of valuable intangibles to a shell company

Excess profit

Co.A

Distribution Subs

"Routine" controlled profit

Brand

Manufacturing Subs

"Routine" controlled profit

Co. Z

Sale of intangible Lump-sum payment

4

Example B ? Transfer of valuable intangibles to a shell company

Fee for services Co.A

"Routine" controlled profit

Distribution Subs

"Routine" controlled profit

Manufacturing Subs

Co. Z

"Routine" controlled profit Excess profit

Brand

5

Example B ? Transfer of valuable intangibles to a shell company

Factors considered:

? No CUT identifiable ? Co. Z relevant facts

? Managed by local trust company ? No employees ? Co. A's executives travel to Country Z annually to validate strategic direction ? Service fee paid to Co. A

? Development, maintenance and execution of worldwide marketing strategy still

performed by same ee's (of Co. A)

? Payment of service fee for these functions

6

Example C ? Transfer of intangible to a company that exercises functions

Co.A Controlled profit

Fee for services

- 30 ee's dismissed - 30 ee's transferred to Z

Distribution Subs

Manufacturing Subs

Co. Z Excess profit

Brand -30 ee's from A HO activities -15 ee's hired

7

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