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Who Benefits from Intangibles?
The Austrian Approach Explained on the Basis of the XXXLutz Case
This article deals with a decision issued by the Austrian Supreme Administrative Court (VwGH) in the case regarding the Austrian furniture retailer XXXLutz which transferred its important intellectual property rights to Malta and licensed them to an Austrian group entity for the purposes of use on the local market. The decision relied mainly on the concept of economic ownership; however, it provides an interesting point of reference for further discussion in the context of relevant developments in transfer pricing and international tax law. Karol Dziwiński discusses the approach taken by the Court as well as its ramifications for the practice, in particular with reference to the application of the concepts of economic ownership and the DEMPE functions.
1. Facts of the Case
The discussed case concerned the application of a license structure by the Austrian furniture retailer XXXLutz and the respective license payments from an Austrian group entity X-KG to a permanent establishment (PE) of another group entity M-GmbH located in Malta. As a part of an intra-group restructuring in the year 2007, the real estate and furniture retail business of the group were separated. M-GmbH, an Austria...