The rise (and fall?) of the profit split method / Guglielmo Maisto -- History and evolution of the profit split method in the OECD guidelines / Paolo Valerio Barbantini -- The new guidance of chapter I of the OECD guidelines / Xaver Ditz -- The BEPS action plan and updating the OECD guidance on profit splits method / Andrew Hickman -- When is a transactional profit split method the most appropriate method? / Caroline Silberztein -- Application of the profit split method / Harlow Higinbotham & Vladimir Starkov -- Administrative approaches to profit split method / Bruno Gibert & Celine Pasquier -- Potential state aid exposure in case of tax rulings based on the profit split method / Gabriella Cappelleri & Mario Tenore -- The work of the joint transfer pricing forum on the profit split method / Mauro Faggion & Simone Di Vaia -- The impact of profit split to indirect taxes, with emphasis on European VAT / Andrea Parolini -- A comparative analysis of the UN and OECD approaches on the transactional profit split method and formulary apportionment / Michael Kobetsky -- Countries experience : status quo and likely evolutions -- France / Bruno Gibert -- Countries experience : status quo and likely evolutions -- Germany / Xaver Ditz -- Countries experience : status quo and likely evolutions -- Italy / Aurelio Massimiano & Marco Valdonio -- Countries experience : status quo and likely evolutions -- Spain / Joan Hortalà i Vallvé -- Countries experience : status quo and likely evolutions -- Switzerland / Raoul Stocker & Patrick Schmid -- Countries experience : status quo and likely evolutions -- United Kingdom (England and Wales) / Steve Edge & Alicia Tan -- Countries experience : status quo and likely evolutions -- United States / Yariv Brauner -- Cross-border allocation of MNEs profits (losses) in light of the digitalization of the economy : an assessment of amount A, B and C / Vikram Chand -- Application of the profit split method to digital business models and to the digitalization of the economy / Vikram Chand -- Selected industry experiences and theoretical approaches / Emmanuel Llinares & Amanda Pletz.
Summary:
Among the various transfer pricing methods, the profit split method (PSM) is under the spotlight after the OECD's Base Erosion and Profit Shifting (BEPS) project. However, both expert analysis and experience indicate that this method is not straightforward either for taxpayers to apply or for tax administrations to evaluate. Crucial issues covered by the contributors include the following: choice of the appropriate splitting factors, their relative weights, and valuation of the contributions; uncertainties and outcomes potentially not aligned with the arm's-length standard; possible role of assessments made by the European Commission on State aid; nexus with the work done by the EU Joint Transfer Pricing Forum; impact of profit split on indirect taxes (VAT/customs tax/excise tax); and application to digital business models and, in general, to the digitalized economy. Moreover, relevant experience of applying this method in France, Germany, Italy, Spain, Switzerland, the United Kingdom, and the United States is provided. A concluding chapter also deals with selected industry experiences (financial services, technology, and fashion industry).
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