Financial Services Transfer Pricing Perspectives
In response to the rapidly changing and complex transfer pricing environment, this edition focuses on the release of the Base Erosion and Profit Shifting (BEPS) Action Plan published in July 2013 by the Organisation for Economic Cooperation and Development (OECD) and their transfer pricing implications on the financial services sector.
In this edition, we present four BEPS related articles covering areas we feel will only increase in importance over the coming years.
- The first article, In-transit - travelling bankers and potential permanent establishment implications in a post Base Erosion and Profit Shifting world, discusses the characteristics to be taken into consideration in determining the possible PE status of travelling bankers.
- The second article, Uncharted territory - The impact of OECD developments on intangibles in the financial services industry addresses the increasingly important topic of intangibles in financial services. Recent OECD publications on BEPS and intangibles indicate that financial trading systems and quantitative models are regarded as intangibles. This will potentially open discussions regarding their ownership and allocation of profit.
- The third article, A look at re-characterisation, explores the re-characterisation of financial transactions as a means by which governments can challenge activities that the BEPS analysis would regard as avoidance. By looking at the OECD framework and recent legal cases, the author points to criteria that inter-company transactions need to meet in order to avoid the risk of re-characterisation.
- The fourth and final article, Australia and BEPS, focuses on BEPS from an Australian viewpoint. It highlights the leading role that Australia wants to take in the global BEPS discussion and examines several recently introduced laws and papers in response to BEPS. In particular, the Australian Tax Office (ATO) has always been at the forefront of transfer pricing discussions.