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The Luxury Sector’s Transfer Pricing Dilemma
A Close Look at TNMM and RPM Methodologies
The SAS Roger Vivier Paris case highlights key challenges in applying transfer pricing rules within the luxury industry, particularly regarding intangible assets and profit allocation. This article examines the case’s implications, addressing methodological concerns, compliance risks, and broader lessons for multinational enterprises.
1. Introduction
The Cour Administrative d’Appel de Paris upheld key tax adjustments imposed on SAS Roger Vivier Paris (RVP) for the fiscal years 2012 to 2014, highlighting critical transfer pricing compliance issues.
The ruling identified three primary concerns:
indirect profit transfers through pricing and operational arrangements,
RVP’s financial and operational dependence on related entities in Portugal, Luxembourg, and Italy, and
methodological flaws in its transfer pricing approach, notably the lack of comparables or adjustments to support its position.
This decision carries significant implications for multinational enterprises, particularly in the luxury sector, where intercompany pricing structures can be especially complex. It underscores the importance of maintaining robust transfer pricing documentation, strictly adhering to the arm’s length princ...