College 1 week 7 – Transfer Pricing & Digital Economy
Setting the scene
WAGs at wat – all the vicious rows between the wives, girlfriends of footballers
2 vrouwen hebben een conflict omdat de ene informatie had gelekt over de andere.
Profit centers, tabloids, advertisements, which country should be able to tax?
Do the women themselves have nexus and a profit center, or are it only the tabloids who
have a business model?
Veel vragen; where and what to tax?
Basics of transfer pricing
Transfer pricing regels zijn opgenomen in het nationale recht, maar ook in verdragen
Art. 9 OESO: legal framework, regulates how to price the intercompany transactions
Art. 7 OESO: regulates how to price and remunerate the dealing between the head office
and the PE.
OECD guidelines for the intercompany transactions
Separate report for Pes
If it’s not possible to find a comparable transaction in the market, the profit split is used
, Functional analysis
Depending on the company’s characteristics and ambition, various legal and operating
models are possible
Intangibles
Attribution of profits – economic ownership of assets
Intangible assets: DEMPE Functions
- Performance of and control over functions
- Functional contributions per group company
- Control & strategic decision
- Management & control budgets
Translated to a digital business model:
Uber etc., they have a dual principle model. There is nexus, we are in art. 9 OESO. A US and
NL company, which have control over DEMPE functions; principles. Routine entities in the
other countries; signing on the riders, signing with the restaurants etc. Royalty’s are paid;
difficult to price. The local in market activities; these are entities, look art. 9; service
provider, look at TNNM; cost plus. However, in the business model of Uber they can also
enter a new market in a neighboring country; attract drivers and restaurants no nexus, no
PE; don’t have art. 9/5/7 active in a market without presence. They have a very
centralized business model.
Setting the scene
WAGs at wat – all the vicious rows between the wives, girlfriends of footballers
2 vrouwen hebben een conflict omdat de ene informatie had gelekt over de andere.
Profit centers, tabloids, advertisements, which country should be able to tax?
Do the women themselves have nexus and a profit center, or are it only the tabloids who
have a business model?
Veel vragen; where and what to tax?
Basics of transfer pricing
Transfer pricing regels zijn opgenomen in het nationale recht, maar ook in verdragen
Art. 9 OESO: legal framework, regulates how to price the intercompany transactions
Art. 7 OESO: regulates how to price and remunerate the dealing between the head office
and the PE.
OECD guidelines for the intercompany transactions
Separate report for Pes
If it’s not possible to find a comparable transaction in the market, the profit split is used
, Functional analysis
Depending on the company’s characteristics and ambition, various legal and operating
models are possible
Intangibles
Attribution of profits – economic ownership of assets
Intangible assets: DEMPE Functions
- Performance of and control over functions
- Functional contributions per group company
- Control & strategic decision
- Management & control budgets
Translated to a digital business model:
Uber etc., they have a dual principle model. There is nexus, we are in art. 9 OESO. A US and
NL company, which have control over DEMPE functions; principles. Routine entities in the
other countries; signing on the riders, signing with the restaurants etc. Royalty’s are paid;
difficult to price. The local in market activities; these are entities, look art. 9; service
provider, look at TNNM; cost plus. However, in the business model of Uber they can also
enter a new market in a neighboring country; attract drivers and restaurants no nexus, no
PE; don’t have art. 9/5/7 active in a market without presence. They have a very
centralized business model.
