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Business Restructurings: Transfer Pricing Aspects from a Distributor's Perspective - When Should Shifted Profit Potential be Remunerated?
Jönköping University. Jönköping University, Jönköping International Business School, JIBS, Commercial Law.
2010 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The OECD Guidelines stipulates that a business restructuring resulting in shifted profit potential not automatically implies that compensation should be paid between the restructuring parties. This thesis examines when shifted profit potential should be remunerated from the perspective of the fictive Swedish distributor Enterprise A which is facing a business restructuring. The arm’s length principle does not require any remuneration for the mere shift of profit potential when applying the principle on business restructurings. Instead, the questions are whether there has been a transfer of something of value; or a termination or significant renegotiation of the current agreement. In the context of remuneration for shifted profit potential the questions can be rephrased to whether considerable assets and/or rights have been transferred which carry considerable profit potential that should be remunerated. And, whether the arm’s length principle requires remuneration to be paid by reference to the concept of “options realistically available”. Enterprise A’s shifted profit potential could be remunerated and thus have tax consequences if there are other options realistically available for the entity apart from entering into the business restructuring. Enterprise A’s bargain power would then have been greater and consequently the chances of being remunerated as well. Further, Enterprise A could be remunerated as a result of the shifted profit potential if the entity takes title to transferred marketing intangibles that can be identified and assessed valuable. The shifted profit potential should as well be remunerated and thus have tax consequences if the parties in Corporate Group C have included a compensation clause in their contract, and the clause can be assessed as at arm’s length when considering what independent parties would have agreed upon.

Place, publisher, year, edition, pages
2010. , 61 p.
Keyword [en]
transfer pricing, business restructurings, arm’s length principle, marketing intangibles, profit potential, options realistically available
National Category
Law
Identifiers
URN: urn:nbn:se:hj:diva-14115OAI: oai:DiVA.org:hj-14115DiVA: diva2:381231
Uppsok
Social and Behavioural Science, Law
Supervisors
Examiners
Available from: 2011-01-12 Created: 2010-12-25 Last updated: 2011-01-12Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf