SAS Roger Vivier Paris operates a store in Paris that sells shoes and luxury goods under the Roger Vivier brand. Since its inception in 2003, it had systematically generated negative net margins. Following an audit for the financial years 2012 to 2014, the tax authorities considered that SAS Roger Vivier Paris had indirectly transferred profits to foreign related parties due to non-arm’s length pricing of controlled transactions – low prices for returned unsold products and excessive costs related to the promotion and marketing of the Roger Vivier brand, which it did not own. In order to determine the arm’s length results of SAS Roger Vivier Paris, the tax authorities carried out a benchmark study and applied an operating margin of 6.76%, corresponding to the average operating margin of the study. This average operating margin was determined on the basis of the margins corresponding to the operating results reported by the companies included in the study for the financial years 2005 ... Read more