Risk Assumption under the Authorised OECD Approach and the 2017 OECD Transfer Pricing Guidelines

Inhaltsverzeichnis

Risk Assumption under the Authorised OECD Approach and the 2017 OECD Transfer Pricing Guidelines
TPI 5/2018
1. Introduction
2. The Issue Stated
3. Risk Control Functions under the OECD TPG
- 3.1. The Six-Step Approach
- 3.2. Risk Management Functions
  - 3.2.1. Decision-Making to Take On, Lay Off or Decline a Risk-Bearing Opportunity and the Actual Performance of that Decision-Making Function
  - 3.2.2. Decision-Making on How to Respond to Risk and the Actual Performance of that Decision-Making Function
  - 3.2.3. Risk Mitigation and the Performance of the Risk Mitigation Function
- 3.3. Control over Risk
4. AOA and SPF Relevant to the Assumption/Attribution of Risk
- 4.1. High-Level Overview of the AOA
- 4.2. SPF Relevant to the Assumption/Attribution of Risk
- 4.3. AOA Risk Analysis
- 4.4. Example
5. Similarities and Divergences with Regard to Risk Between the AOA and the 2017 OECD TPG
- 5.1. Similarities with Regard to Risk Between the AOA and the 2017 OECD TPG
  - 5.1.1. Focus on the Link Between (People) Functions and Risk
  - 5.1.2. Case-by-Case Approach
  - 5.1.3. Considering the Upsides and Downsides of the Risk
  - 5.1.4. Conduct Test
- 5.2. Divergences Between the AOA and the 2017 OECD TPG with Regard to Risk
  - 5.2.1. Issues Related to Factual and Legal Differences Between a PE and Entities Being Members of the Same Group
  - 5.2.2. Funding of the PE Versus Financial Capacity to Assume the Risk
  - 5.2.3. Capital Follows Risk Versus Risk Follows Capital (Having the Financial Capacity to Assume the Risk)
  - 5.2.4. Significant People or Significant Functions
  - 5.2.5. Examples
6. One Question Remains

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Dokumentvorschau

TPI 5, Oktober 2018, Seite 243

Risk Assumption under the Authorised OECD Approach and the 2017 OECD Transfer Pricing Guidelines

Absence of Full Guidance Creates Confusion and Uncertainty

Stefaan De Baets

On March 22^nd, 2018, the OECD published Additional Guidance on the Attribution of Profits to Permanent Establishments (hereinafter: the Guidance). The publication of this Guidance finds its origin in the BEPS Action 7 report, published on October 5^th, 2015. First, this article identifies the issues with regard to risk as well as the discussion in the Guidance. After a brief discussion of the Guidance on risk under the 2017 OECD TPG and the main principles of the Authorised OECD Approach (AOA; including the significant people functions [SPF] relevant to the assumption/attribution of risk), the similarities and divergences with regard to risk between the two sets of guidance (AOA and OECD TPG) are discussed.

1. Introduction

The BEPS Action 7 report widened the definition of a permanent establishment (PE) under Art 5 OECD Model Tax Convention on Income and on Capital (OECD MTC), in particular with regard to commissionaire/dependent agent structures, activities of a preparatory or auxiliary nature and fragmentation of activities. At the same time, a mandate was given to develop additional guidance on how the rules on Art 7 (business profits) of the OECD MTC would apply to PEs because of ...

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Risk Assumption under the Authorised OECD Approach and the 2017 OECD Transfer Pricing Guidelines

Absence of Full Guidance Creates Confusion and Uncertainty

1. Introduction

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