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Transfer Pricing in the Crisis
Solution Approaches from Germany, Austria, Switzerland and Liechtenstein
This case study has been presented at the D-A-CH Tax Congress 2023 which occurs every two years in Vienna, bringing together experts and advisors from the German-speaking world to discuss current topics within the cross-border context of these countries from the perspective of tax law practice, tax administration, case law and tax policy. This article summarizes and analyzes the discussions about the transfer pricing implications of distributors that in a crisis scenario do not generate routine profits anymore, including primary and secondary adjustments along with comparability adjustments. Based on that, solution approaches from Germany, Austria, Switzerland and Liechtenstein are described.
1. Facts of the Case
LI-AG is the parent company of the Breathe Group and is resident for tax purposes in Liechtenstein, being active in the medical device technology sector. The related goods are manufactured by unrelated parties in Asia. As concerns the product development of the goods, it is controlled by the Liechtenstein entity, which also holds all the patents, product and process know-how. Additionally, there are developing centers located in Shanghai, Poland and Ukraine that act as contr...