Strategic Insights into Transfer Pricing: Unveiling Common Audit Red Flags (Part II)

This blog is the second of our two-part series calling attention to common red flags that stand out for tax authorities during audits. In these blogs we share our experience with tax audits, specifically pointing out some pitfalls to watch out for while framing Transfer Pricing (“TP”) policies and compiling TP documentation.
Our insights are meant to serve as a starting point for companies to assess and refine their approach to TP in order to be better prepared for audits and scrutiny. If you find the insights in this blog helpful, do also read our other blog on this topic, in which we listed our first four tips for effectively managing and mitigating these “red flags”.

Strategic Insights into Transfer Pricing: Unveiling Common Audit Red Flags (Part I)

1. Big swings in profits Large fluctuations in a company’s profits one year to the next naturally draw the attention of the tax authorities. In every such case, there is bound to be a discussion. Hence, it is critical to understand the reasons behind profit fluctuations to assess the appropriateness of the TP model and […]

Latest update on the India-Netherlands dividend WHT rate: Ruling from the Supreme Court of India

This Indian SC ruling has caused quite a stir among companies invested in India as it could lead to a flurry of tax and penalty demands from the Indian tax authorities. Notably, with regard to the Netherlands, the impact of the SC ruling appears to be limited to the dividend WHT rate under the India-Netherlands […]

The most impactful changes to the NL – MEX DTAA (following the ratification and deposit of the MLI by Mexico)

Since the Netherlands has already ratified and deposited the MLI with the OECD in 2019, the Netherlands-Mexico DTAA (or “the DTAA”) will be modified since the MLI entered into force for Mexico’s DTAAs (i.e., 1 July 2023). The DTAA is modified based on each party’s specific choice to opt in or opt out of the […]

10 Quick Observations on the EC’s ATAD3 Proposal

For a detailed explanation of the implementation, consequences and who’s in/out of ATAD3, reference is made to our blog ATAD3 – Who’s In & Who’s Out. 1. Need for holistic approach ATAD3 is part of a larger effort to combat the use of shell companies for tax avoidance. For example, the ECJ’s decision in the Danish […]

ATAD3 – Who’s In & Who’s Out

In this blog, we provide insight into which companies will be most affected by the implementation of the European Commission’s (proposed) Directive – ATAD3 (or the Third Anti Tax Avoidance Directive). The amended draft of the ATAD3 proposal has been approved by the European Parliament and published by the European Commission (“EC”) on 17 January 2023. The Member States aim to implement the proposed Directive w.e.f. 1 January 2024. However, some of the provisions of the ATAD3 proposal have a two-year look-back period (i.e., covering 2022 & 2023).

Preparing for ATAD3

In this blog, we highlight the urgency for E.U. companies to examine whether they meet certain “minimum substance requirements” in preparation for ATAD3 – the proposed E.U. Directive aimed at preventing the misuse of “shell entities” in the E.U. Once implemented by the E.U. Member States, the proposed Directive will require E.U. companies that do not meet the specified substance requirements to prove that they perform actual economic activity. The proposed Directive that is set to take effect on 1 January 2024 will apply to all E.U. companies (as in, without any monetary threshold). Consequences proposed under ATAD3 include the denial of TRCs, which will impact the dealings of the affected companies within the E.U. and in third-countries. Since some of the substance requirements proposed under ATAD3 have a two-year “look back” provision (i.e., potentially covering 2022 and 2023), it is prudent for E.U. companies to start assessing how they measure up against these requirements ASAP.

Medingo – Ruling on the concept of post-acquisition business restructurings (Part II: analysis)

On 8 May 2022, the Tel Aviv-Yafo District Court (“the Court”) decided on a transfer pricing dispute regarding the concept of post-acquisition business restructurings. In 2010, the Roche Group acquired the shares of Medingo. Six months post the acquisition, the parties entered into several agreements, changing Medingo’s business model from that of a full-fledged entrepreneur to a low-risk manufacturing, sales and development site. Three years later, Medingo’s (pre-acquisition) IP was sold to Roche and its activities were ceased. The Court had to decide whether the (pre-acquisition) IP was transferred/sold to Roche at the time of acquisition or three years later, when Medingo’s activities were ceased. The Israeli tax authorities (“ITA”) attempted to disregard the agreement and to substitute this for a deemed sale of IP. Medingo/Roche ultimately won the case. In this note, we will share our insights/takeaways.

Medingo – Ruling on the concept of post-acquisition business restructurings (Part I: overview)

On 8 May 2022, the Tel Aviv-Yafo District Court (“the Court”) decided on a transfer pricing dispute regarding the concept of post-acquisition business restructurings. In 2010, the Roche Group acquired the full share capital of Medingo. Six months post the acquisition, the parties entered into several agreements, changing Medingo’s business model from that of a full-fledged entrepreneur to a low-risk manufacturing, sales and development site. Three years later, Medingo’s (pre-acquisition) IP was sold to Roche and its activities were ceased. The Court had to decide whether the (pre-acquisition) IP was transferred/sold to Roche at the time of acquisition or three years later, when Medingo’s activities were ceased. This blog comprises of an overview of the case.

Medtronic III – U.S. Tax Court attempts to “bridge the gap”?

In light of the recent U.S. Tax Court deliberation in the Medtronic case, this contribution intends to discuss the facts, considerations and conclusions reached. Further, this contribution alongside with upcoming contributions intends to critically assess the conclusions reached by the U.S. Tax Court (as well as comparable court cases) and, the possibility of reaching a different conclusion considering another approach to the case based on the complexity provided by the parties involved.