1 Emerging Transfer Pricing Topics April , Buenos Aires Roland von Frankenhorst

2 Emerging Transfer Pricing Topics: Business restructuring (BR) is a relatively new emerging transfer pricing topic. => high need for regulation because of increasing number of cross-border restructuring within multinational companies. Intercompany transfer of intangibles is not a new topic in transfer pricing, however => growing transaction volumes of immaterial goods, their complexity and variety lead to a emerging need for better and concrete regulation of this topic. Both topics are strongly interconnected because business restructuring often leads to transfer of intangibles.

3 Business restructuring We talk about business restructuring when we have reorganization processes within multinational groups accompanied by changes in functions, risks and assets of the company and their shifting across the border. For example, a manufacturing company in France is shut down and the production capacities for the same goods previously produced in France are moved to Brazil. - Germany was one of the first countries to introduce extensive regulations in 2007/ OECD introduced recommendations on BR first in its Guidelines in 2010  BR guidelines is still controversially discussed in the business community. There are few concrete guidelines on implementation.  BR is a new topic for the praxis - there are few experiences on how tax authorities will implement the guidelines.

4 Intangibles Talking about intangibles we usually mean patents, rights, know-how, also marketing know-how, customer base, etc. These are immaterial goods which may generate additional profits for the company and have an independent economic value. However the reality of transactions between the multinationals turns out to be more complex, which requires another more concrete definition of intangibles for TP purposes, their identification and valuation. - In June 2012 OECD has published a discussion draft on intangibles, followed by extensive public consultations.  Business community sees further need for concretization and further guidance for implementation, as the draft introduces some innovative thoughts on handling intangibles for transfer pricing purposes.

5 Main future challenges More than for other transaction kinds for both, business restructuring and intangibles, the main future challenges are: - Definition: legal and terminological differentiation for transfer pricing purposes - Comparability analysis, i.e. valuation From the perspective of developing countries both topics bear considerable potential for dispute. As today the pattern of business restructuring and intangible transactions still mainly goes in one direction where developing countries are recipients of intangibles or new functions and hence face the outflow of capital though payments.