Transfer pricing in practice: April 2019
Nov 21-23
Understand how transfer pricing works in practice from experts in tax, economics and law
This course will teach you how to tackle transfer pricing in practice. While it will serve as the perfect refresher for the ADIT exam or a framework from which to develop your study, it will most importantly help you to be more efficient at work, whether in industry or professional practice.
Our tutors deal with different aspects of transfer pricing and one of the aims of the course is to enable participants to see some of the topics with which you may already be familiar, from a different perspective. For example, comparability analyses can produce different results when looked at by an economist from those by the practitioner focussed on tax compliance.
New for 2018 is the inclusion of free trial access to a set of online study modules created by one of our tutors, Johann Muller, which has been designed to run alongside our course, covering each of the topics in turn.
All courses takes place in central London. Call +44 (0)1962 458058 or email Deborah@djhinternationaltax.com for more details.
What is covered
- Fundamental sources
- The arm’s length principle and comparability
- Transfer pricing methods and comparability analyses in practice
- Functional analysis
- Permanent establishments
- Compliance issues
- Avoiding double taxation/dispute resolution
- Specific transactions
- Intangible property
- Business restructurings
- Intra-group services
- Financing
Fundamental sources
- Tax treaties, based on OECD Model: Article 9; also Article 7; and “special relationship” in Articles 10-12;
- OECD sources (Model Convention Commentary, TP Guidelines, Attribution of Profits to PEs, other discussion papers);
- UN Model Commentary;
- EU Codes of Conduct (EUJTPF);
- Local domestic law, illustrating various national examples where they substantially differ from OECD guidelines;
- Selected leading cases e.g. National Semiconductor, Bausch & Lomb, Sundstrand, Xilinx (US), Glaxo, Ford (Canada), DSG (UK), Roche (Australia), Aztech, Mentor Graphics, Ranbaxy (India)
The arm’s length principle and comparability
- Interpretation of the arm’s length principle and current dialogue;
- Associated enterprises;
- The role of comparables; rationale and limits. Situations where no comparables or only imperfect comparables are found;
- Transaction analysis;
- Recharacterisation issues. To what extent should contractual terms between associated enterprises be respected?
Transfer pricing methods and comparability analyses in practice
- OECD methods; explanation of each method with worked examples Selecting the method based on functional analysis results and information available (including reference to FAR analysis, entity characterisation and availability of comparables);
- Typical process proposed by the OECD;
- Aggregation of a taxpayer’s transactions / use of non-transactional third party data;
- Information on the foreign associated enterprise;
- Sources of information on comparable uncontrolled transactions: internal / external comparables; “secret comparables”;
- Comparability adjustments;
- Arm’s length range;
- Timing issues in comparability;
- Compliance issues
Functional analysis
- Goals of functional analysis;
- Analysis of functions, assets and risks;
- Relating functional analysis to selection of transfer pricing method;
- Entity characterisation (e.g. characterisation as “entrepreneur”, stripped risk manufacturer, commissionaire etc. etc.?)
Permanent establishments
- Article 7 (old and new) of the Model Tax Convention ; the 2010 Report on the Attribution of Profits to PEs;
- Model tax convention;
- Recognition of dealings;
- The arm’s length principle applied to transactions between associated enterprises and to the attribution of profits to permanent establishments: similarities and differences
Compliance issues
- TP documentation;
- Penalties;
- TP risk management
Avoiding double taxation/dispute resolution
- Internal TP adjustments: corresponding adjustments, secondary adjustments;
- Mutual agreement procedure;
- Tax treaty arbitration, new Article 25(5);
- EU Arbitration Convention;
- APAs (unilateral, bilateral, multilateral)
Specific transactions
- Intangible property
- The life cycle of intangibles (development, exploitation, exit strategy)
- Different types of intangibles.
- Two possible models to structure the development of intangibles: contract research and development versus cost contribution / cost sharing arrangements.
- Two possible models for exploiting intangibles: principal structure versus licensing out
- Valuation of intangible assets
- Business restructurings
- The nature of business restructuring
- The OECD guidance on the transfer pricing aspects of business restructurings (Chapter IX of the TP Guidelines) including risk, compensation and characterisation
- Intra-group services
- Different types of intra-group services
- Transfer pricing methods: CUPs vs Cost Plus; when Cost Plus is not enough
- Direct/indirect charging; allocation keys
- EUJTPF guidelines on reviewing low value-added services
- Financing
- Loan pricing
- creditworthiness; thin capitalisation
- interest rates
- discussion: is thin capitalisation a transfer pricing issue?
- guarantees – when they would be given
- guarantee fees: the GE Canada case
- an example of treasury services: cash pooling
- Loan pricing
Pricing for 3-day course: £1575 plus VAT
Cost includes full course documentation and refreshments including lunch throughout the three days.
Timings of the sessions are subject to change according to the availability of tutors.
1575 + vat @20%