Samenvatting
Summary TP Models (EXAM SCHEMES)
Summary of 4 pages for the course transfer pricing and attribution of income at UM (tp models)
[Meer zien]Voorbeeld 1 van de 4 pagina's
Voorbeeld 1 van de 4 pagina's
In winkelwagengesponsord bericht van onze partner
Voorbeeld van de inhoud
TRANSFER PRICING MODELS The way chosen by a MNC to distribute the functions, risks and assets across the value chain (or part
thereof) is often referred to as ‘transfer pricing model’ -> in other words, TP models refer to frequent
combinations of functions, assets and risks attributable to the parties to an intercompany transaction.
o Indeed, TP is relevant whenever a company involves a foreign associated enterprise in its
business activities. Also, MNC have different options to distribute the functions, risks and assets
used across the value chain.1
Hence, TP will be relevant for the proper allocation of income across the value chain (in
light of the importance of the role played by each associated entity).
Before outlying some frequent TP models, it is important to keep in mind that, as a general rule, the
value chain of MNC is composed by 3 pillars:
1) R&D
2) Manufacturing these pillars can then be organised in various ways depending on the respective
3) Distribution (i) functions, (ii) assets, (iii) risks used
Also, (i) intercompany services, (ii) financial transactions, (iii) cost contribution arrangements
and (iv) centralisation of entrepreneur are common in practice.
The most common types of TP models (covering different aspects of the value chain of a MNC) include:
1. R&D models
There are 2 main TP R&D models depending on which party is considered the owner of the
intangible2:
1) Fully-fledged researcher
- A fully-fledged researcher both (i) performs routing R&D activities 3 and (ii) owns the
intangible resulting from the value adding R&D activities.
o Hence, the remuneration will be the sum of return of the R&D (routine)
activities and the return on intangibles
- If on the other hand, a company (i) performs the important functions; (ii) assumes the
relevant risks (iii) owns the intangible BUT does not carry out the routine R&D
activities (es because these are outsourced), such company (ie the principal) is
entitled to the return on intangible only and NOT on the return on the routine R&D
functions.
2) Contract R&D
- An entity carrying out R&D activities on behalf of another entity (ie on behalf of the
principal) will normally not own the intangible resulting from such activities.
o The contract R&D would then be a service provider and be remunerated on the
basis of the routine profit
It is therefore possible to have a separation between the performance of the R&D
activities (which could be in high tax jurisdictions) and the taxation of the return
attributable to the intangible (which could be in low tax jurisdictions). This can be
achieved, where an IP company (the principal) outsources the R&D activities to a contract
R&D.
2. Manufacturing models
1
Amendments to the supply chain that involve the redistribution of functions, assets, risks between the members of
the group are referred to as -> business restructuring.
2
The ownership of the intangible results from the combination of performing functions and exercising control over
development, enhancement, maintenance, protection and exploitation functions, providing necessary funding and
other assets, as well as controlling and assuming various risks associated with the intangible.
3
Ie the R&D activities that do not provide value added to the MNC.
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper matteobarchi97. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €3,99. Je zit daarna nergens aan vast.
Is Stuvia te vertrouwen?
4,6 sterren op Google & Trustpilot (+1000 reviews)
Afgelopen 30 dagen zijn er 52510 samenvattingen verkocht
Opgericht in 2010, al 14 jaar dé plek om samenvattingen te kopen