Objectives

The course discusses the various profit allocation approaches that States can choose from a tax policy and practical perspective to tax a Multinational Group (MNE) that operates with separate entities or branches (permanent establishments) throughout the globe. The course is divided into three parts.

The first part of the course starts by providing an overview of the various structures through which a Multinational Enterprise (MNE) organises itself, that is, horizontal vs. vertical structures as well as centralized vs decentralized business structures. Thereafter, the various approaches that could be deployed to allocate profits / losses to such MNEs, in particular, the arm's length and formulary approaches will be discussed.

The second part of the course, which is core of the course, provides a holistic overview of the arm's length principle i.e. Transfer Pricing Rules, especially, the operation of such rules in the Post BEPS world. We will start by discussing various business models, in particular, how "value" is created within them. Then we will discuss the application of the arm's length principle to selected intra group transactions within MNEs such as transactions dealing with goods, services, intangibles, financing, business restructurings and profit allocation to PEs. In this context, we will focus on accurately delineating the transaction as well as applying the transfer pricing methods to the controlled transaction. Moreover, the EU and Swiss approach towards applying the ALP will be discussed. Furthermore, this part will also discuss tax planning using the arm's length principle. To conclude this part, presentations will be made by in house tax experts (from leading multinationals) on international tax planning structures adopted by them in their respective industries.

Finally, the third part of the course will discuss the impact of Covid 19 on the ALP and the future of the arm's length principle from a policy perspective, especially, in light of digitalization of the economy. Should these rules be abandoned in favour of multi factor formulary apportionment or should we alter them by introducing formulary approaches or by moving to a hybrid profit allocation system? This part of the course will be structured in a debate format.

The course follows a case study approach and will discuss several transfer pricing issues with practical illustrations. Moreover, case law from around the Globe and Switzerland will also be discussed.

Contents

Participants following the course will learn the following topics relevant to taxation of MNEs from an international, comparative and Swiss tax law / policy perspective: types of formulary apportionment (multi factor or single factor), application of the arm's length principle, functional analysis, value chain, value network & value shop analysis, transfer pricing methods and comparability analysis, special consideration for intangibles, services & financing (through loans, guarantees, cash pooling and captive insurance), the use of cost contribution arrangements, business restructurings and supply chain management (principal structures), taxation of business activities (permanent establishments and related attribution requirements), state aid & transfer pricing rules, dispute prevention and resolution avenues, reduction of effective corporate tax rates and the future of the arm's length principle in the post BEPS and Digitalized world.

References

Detailed course content with the suggested reading materials will be circulated to all participants who have registered for this course. The course material will also be uploaded on Moodle. The course starts on September 27th, 2021.

Pre-requisites

Although this is not mandatory, participants should be familiar with the basic rules of a domestic tax system, in particular direct taxation of domestic companies, and the fundamentals of international tax rules. Ideally, the participant should have followed / should follow the courses of Prof Chand (International and European Tax law (fundamentals) - 6 ECTS - Printemps) as well as the courses of Prof Danon (Advanced issues in International and European Tax Law (3 ECTS) and International Tax Policy (3 ECTS) - Automne). The course also sets a solid foundation for the course on Digitalization and Taxation done by Prof Chand (3 ECTS - Printemps).

Evaluation

First attempt

Exam:

Written 2h00 hours

Documentation:

Allowed

Calculator:

Allowed

Evaluation:

Participants will be evaluated by means of a two-hour written exam (if the exam is conducted on the premises of UNIL). The exam will consist of MCQs and case studies. The use of a calculator is permitted. Sample exam will be uploaded to MyUnil. In addition, one session of the course will be devoted to answering questions related to the exams. Examen organisé par Faculté de DROIT.

Retake

Exam:

Written 2h00 hours

Documentation:

Allowed

Calculator:

Allowed

Evaluation:

Participants will be evaluated by means of a two-hour written exam (if the exam is conducted on the premises of UNIL). The exam will consist of MCQs and case studies. The use of a calculator is permitted. Sample questions will be uploaded on Moodle. In addition, one session of the course will be devoted to answering questions related to the exams. Examen organisé par Faculté de DROIT.