Tag: Contract R&D
Research and development activities performed based on an agreement/contract with another party – typically the owner of the intangibles.
/ Arm’s Length Principle, Contract R&D, Delineation – Substance over Form, Intangibles – Goodwill Know-how Patents, Ireland, Pharmaceutical, Royalty and License Payments, Royalty and License Payments, Services and Fees, Switzerland
The Swiss company X SA (hereinafter: the Company or the Appellant), is part of the multinational pharmaceutical group X, whose parent holding is X BV (hereinafter referred to as the parent company) in Netherlands, which company owns ten subsidiaries, including the Company and company X France SAS (hereinafter: the French company). According to the appendices to the accounts, the parent company did not employ any employees in 2006 or in 2007, on the basis of a full-time employment contract. In 2010 and 2011, an average of three employees worked for this company. By agreement of July 5, 2006, the French company undertook to carry out all the works and studies requested by the parent company for a fee calculated on the basis of their cost, plus a margin of 15%. The French company had to communicate to the parent company any discoveries or results relating to the work entrusted to it. It should also keep the parent company informed of ... Continue to full case
/ Abnormal act of management, Burden of proof (Onus), Contract R&D, Cost base, Cost plus method, France, Government subsidies, Netherlands, Philips, Transfer Pricing Methods
Philips France SAS provides contract R&D to it’s Dutch parent. Compensation for the service was calculated as cost plus 10%. In the years 2003 to 2007 Philips France received government subsidies for performing R&D. These subsidies had been deducted by the company from the cost base before calculating of the cost plus remuneration. The French tax authorities issued a tax assessment where the deduction was denied and the remuneration calculated on the full cost base. The Supreme Administrative Court ruled that a deduction of subsidies from the cost base does not constitute a “transfer of profits abroad” and allowed the reduced cost base for calculation of the arm’s length remuneration. Click here for translation CÉt_8ème_-_3ème_chambres_réunies_19_09_2018_405779 ... Continue to full case