Tag: Commissionaire

TPG2022 Chapter IX paragraph 9.108

The selection and application of a transfer pricing method to post-restructuring controlled transactions must derive from the analysis of the economically relevant characteristics of the controlled transaction as accurately delineated. It is essential to understand what the functions, assets and risks involved in the post-restructuring transactions are, and what party performs, uses or assumes them. This requires information to be available on the functions, assets and risks of both parties to a transaction, e.g. the restructured entity and the foreign associated enterprise with which it transacts. The analysis should go beyond the label assigned to the restructured entity, as an entity that is labelled as a “commissionnaire” or “limited risk distributor” can sometimes be found to own valuable local intangibles and to continue to assume significant market risks, and an entity that is labelled as a “contract manufacturer” can sometimes be found to pursue significant development activities or to own and use unique intangibles. In post-restructuring situations, particular attention should ... Read more

TPG2022 Chapter IX paragraph 9.23

For instance, where a full-fledged distributor is converted into a limited-risk distributor or commissionnaire resulting in the reduction or elimination of risks relating to inventory in the restructured enterprise, in order to determine whether such risk is economically significant the tax administration may want to analyse: The role of inventory in the business model (for example, speed to market, comprehensive range), The nature of the inventory (for example, spare parts, fresh flowers), The level of investment in inventory, The factors giving rise to inventory write-downs or obsolescence (for example, perishability, pricing pressures, speed of technical improvements, market conditions), The history of write-down and stock obsolescence, and whether any commercial changes affect the reliability of historic performance as an indicator of current risk, The cost of insuring against damage or loss of inventory, and The history of damage or loss (if uninsured) ... Read more

TPG2017 Chapter IX paragraph 9.108

The selection and application of a transfer pricing method to post-restructuring controlled transactions must derive from the analysis of the economically relevant characteristics of the controlled transaction as accurately delineated. It is essential to understand what the functions, assets and risks involved in the post-restructuring transactions are, and what party performs, uses or assumes them. This requires information to be available on the functions, assets and risks of both parties to a transaction, e.g. the restructured entity and the foreign associated enterprise with which it transacts. The analysis should go beyond the label assigned to the restructured entity, as an entity that is labelled as a “commissionnaire” or “limited risk distributor” can sometimes be found to own valuable local intangibles and to continue to assume significant market risks, and an entity that is labelled as a “contract manufacturer” can sometimes be found to pursue significant development activities or to own and use unique intangibles. In post-restructuring situations, particular attention should ... Read more

TPG2017 Chapter IX paragraph 9.23

For instance, where a full-fledged distributor is converted into a limited-risk distributor or commissionnaire resulting in the reduction or elimination of risks relating to inventory in the restructured enterprise, in order to determine whether such risk is economically significant the tax administration may want to analyse: The role of inventory in the business model (for example, speed to market, comprehensive range), The nature of the inventory (for example, spare parts, fresh flowers), The level of investment in inventory, The factors giving rise to inventory write-downs or obsolescence (for example, perishability, pricing pressures, speed of technical improvements, market conditions), The history of write-down and stock obsolescence, and whether any commercial changes affect the reliability of historic performance as an indicator of current risk, The cost of insuring against damage or loss of inventory, and The history of damage or loss (if uninsured) ... Read more
France vs. Ballantine's Mumm Distribution, Dec 2012, CAA no 10PA00748

France vs. Ballantine’s Mumm Distribution, Dec 2012, CAA no 10PA00748

Ballantine’s Mumm Distribution (later – Société de participations et d’études des boissons sans alcool or SOPEBSA), is a French wholesaler of beverages, and was, until 1999, a fully fledged distributor on the French market of the products from the English company Allied Domecq Spirits and Wine Limited (ADSW). Both companies are owned by the Allied Domecq PLC group. By a commission contract entered into 12 April 1999, Ballantine’s Mumm Distribution continued to market the products of Allied Domecq Spirits and Wines Limited in France but now as a commission agent. Following an audit for FY 1997 to 2000, the tax administration considered that Ballantine’s Mumm Distribution had, for the financial year ending in 2000, on the one hand, unduly borne an expense relating to a goods insurance contract, and on the other hand, transferred its clientele to Allied Domecq Spirits and Wine Limited without consideration. The tax authorities considered that these transactions were part of an abnormal management constituting a ... Read more