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Medtronic III: The best method is yet to come?

The recent decision from the U.S. Tax Court results in an outcome that is anything but tidy. What happened? Read our commentary in this edition of Insights: MEDTRONIC PART DEUX: THE BEST METHOD IS YET TO COME? The purpose of the most recent decision in the Medtronic saga[1] extends and refines the prior analysis of one of five connected controlled transactions within Medtronic’s controlled group of multinational medical device producers and suppliers.  The transactions may be described as follows: The first two transactions – license of manufacturing intangible property and license of trademarks – were the main subject of a period of examination controversy that concluded with the I.R.S. adjusting the royalty income of the U.S. Medtronic licensor for tax years 2005 and 2006. The adjustments included additional income necessary for the royalty to be arm’s length as determined under the comparable profits method (“C.P.M.”)… Read More »Medtronic III: The best method is yet to come?

After the gold rush

Comments and comparative statics after the final decisions in the Cameco and Glencore transfer pricing litigation matters, this month in Insights. Two significant transfer pricing cases about mined materials pricing between controlled companies have now been concluded with dismissals of tax authority applications for leave to appeal issued by the highest courts of Australia[1] and Canada.[2]  Both decisions upheld the original transfer pricing policy of the taxpayer after lengthy disputes informed by tax administration practice in two countries that are often looked to internationally for precedent, and by the 1995 edition of the O.E.C.D. Transfer Pricing Guidelines since replaced by 2009, 2010 and 2017 editions. This article first examines two transfer pricing questions that are similar in general outward appearance, approached in different ways by the tax authorities, and evaluated in broadly similar but not identical ways by the courts.  I then consider how each… Read More »After the gold rush

Danish appeal court decision in Ecco Sko A/S

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A recent article in Insights commenting on the decision of the Danish Western High Court on the pricing of intermediate and finished tangible property of the well-known global shoe company at the end of a lengthy transfer pricing audit. See also https://www.plesner.com/insights/highligts/2020/08/ecco-successful-in-landmark-transfer-pricing-case-before-the-danish-western-high-court?sc_lang=en Imagine you are in a Lower East Side tenement in the 19th century. It is 2:00 a.m. the building is totally quiet.  Then, a  sound from above is overhead. It is a shoe dropping on the floor above. You wait for the inevitable follow-up: the sound of a second shoe landing on the floor.  In October, the Danish Tax Agency received a decision[1] from the Western High Court concerning an appeal originating from a transfer pricing audit commenced in 2006. This was the sound of the first shoe. Where is the sound of the second shoe? With a similar sense of inevitability, we… Read More »Danish appeal court decision in Ecco Sko A/S

IRS documentation best practices FAQ

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The IRS released some helpful guidance for drafters of §6662(d) transfer pricing reports a few months ago. This guidance is especially helpful if one thinks forward to how it might be used during an examination or a double tax case. This article appears in Insights and is also available in Canada through Thomson Reuters Taxnet Pro service. THE DO’S AND DON’TS OF I.R.S. TRANSFER PRICING STORYTIME Earlier this year, the I.R.S. updated its Transfer Pricing Documentation Best Practices F.A.Q. list with a response to Q. 4, What are some areas the I.R.S. has identified in transfer pricing documentation reports that could benefit from improvement?1 Given the uncanny resemblance of the I.R.S. list of documentation pet peeves to my many years of review notes written for transfer pricing documentation drafters in the U.S., Canada, and elsewhere, it seemed that this would be a good time of… Read More »IRS documentation best practices FAQ