ブログBLOG
2022.11.18
Content
According to the Netherlands, this is confirmed in the 2010 OECD TP Guidelines as well as the 1995 OECD TP Guidelines, which applied when the SMBV APA was concluded. The Netherlands submits that, according to the OECD TP Guidelines, compensation for transactions between two independent companies will usually reflect the functions that each company performs and that therefore the functional analysis should be at the centre of the assessment of the arm’s-length nature of the remuneration of SMBV. Pursuant to the OECD TP Guidelines, the contractual conditions are the starting point when it comes to determining whether the arm’s-length principle has been applied correctly. According to the Netherlands, the remuneration agreed upon in the SMBV APA is at arm’s length and the TNMM is the appropriate method to reach an arm’s-length outcome in this case. The Netherlands argues that transfer pricing is not an exact science and that there is therefore a range of figures within which the transfer price can lie.
The 2010 OECD TP Guidelines clarify that control should be understood, in this context, as the capacity to make decisions to take on the risk and to manage it. This would require the company to have people who perform those control functions (168). The arrangements differ principally depending on whether the third party exploits the IP directly on the market by selling products to end customers or not. It also agrees that any profits generated by SMBV in excess of that level of remuneration will be paid out as a royalty to Alki LP which is not taxed in the Netherlands.
In conclusion, the Commission rejects the claims that any effective risk transfer takes place from SMBV to Alki LP through contractual arrangements. Therefore, any component of the royalty meant to compensate for an entrepreneurial risk transfer cannot be justified. In addition, Alki LP’s capacity to bear financial risk is limited to its financial resources and to the financial resources of its partners. According to the information submitted by Starbucks to the Commission (171), the latter do not declare separate accounts, but are themselves limited liability companies. Therefore, the financial capacity of Alki LP is inferior to and cannot be equated to the overall financial capacity of the group. In this specific context, the variable nature of the royalty payment gives a first indication that the level of that payment bears no relation to the value of the IP for which it is being paid.
A royalty is compensation paid in exchange for the use of intellectual property or natural resources. The royalty is typically computed as a percentage of the sales or profit proceeds generated from the use of these assets.
In order to analyse what products are the main drivers of SMBV’s sales and to verify whether coffee roasting is indeed the main economic activity of SMBV, the Commission requested the breakdown of SMBV’s sales by product. Starbucks provided the amounts received from the Shops for the coffee beans (highlighted in Table 2) and separately the amounts of any other payments from the Shops for other activities such as sale of cups, presented in Table 2. A typical profit and loss account first records the income that a company receives from its normal business activities, usually from the sale of goods and services to customers. That paragraph of the 2010 OECD TP Guidelines is often interpreted by tax advisors in situations of transactions between two related companies as allowing to estimate the arm’s-length profitability of only one of them, i.e. the less complex one, and attributing any other profit observed in the accounts to the second company, which is considered more complex.
The shares of Class B Common
Stock are convertible at any time at the option of the holder into
shares of Class A Common Stock on a share-for-share basis. In
addition, shares of Class B Common Stock will be automatically
converted into a like number of shares of Class A Common Stock
upon any transfer to any person or entity which is not a permitted
transferee. (206) Starbucks indicated that the revenues under the description ‘REV PACKAGED COFFEE’ relate to SMBV’s roasting and packaging function. Revenues from other items which could cover products processed partially on the basis of coffee roasted by SMBV represents according to Starbucks a small portion of the total roasting output of SMBV, see recital 94. (155) Starbucks indicated that the revenues under the description ‘REV PACKAGED COFFEE’ relate to SMBV’s roasting and packaging function and that revenues from other items which could cover products processed partially on the basis of coffee roasted by SMBV represent a small portion of the total roasting output of SMBV, see recital 94. Moreover, as explained in recital 423, the SMBV APA should be considered as granting operating aid to SMBV and the Starbucks group.
The IRS typically considers royalties as ordinary income. It may be reported on Schedule E in most cases or Schedule C if you are self-employed.
Then they add insult to injury by cutting the royalty rate itself by as much as two-thirds. When an author gets paid only one-third the normal rate on that reduced price, the word “pittance” seems appropriate. Digital payments provide oil and gas producers with a compelling opportunity to optimize manual, paper-based royalty payments while improving the level of service they provide to millions of landowners. These types of companies receive income from fees, commissions, and royalties and do not have inventories of goods.
Contrary to the claim by the Netherlands that the costs of non-coffee products are pass-through costs for SMBV (208), SMBV in fact records a margin on the resale of non-coffee products. Furthermore, the prices of coffee products sold by SMBV to the Shops is determined on a cost basis as explained in recital 96. Therefore, the Commission considers that the direct and indirect costs of C.A.F.E. Practices Programme is, contrary to what Starbucks claims, a more appropriate way to approach the arm’s-length pricing of the programme on the price of green coffee beans charged to SMBV. The transfer pricing report lists the green coffee bean sourcing agreement between SMBV and SCTC among the most important transactions and inter-company flows, but fails to examine or analyse whether the price charged for the green coffee beans by SCTC to SMBV is at arm’s length. Finally, based on the financial information provided in Table 2 and Table 8, Figure 3 presents SMBV’s profit margin on its coffee roasting activities, which is obtained by subtracting the price paid by SMBV to SCTC for green coffee beans from the revenues of roasted coffee recorded under the description ‘REV PACKAGED COFFEE’ for each year (155). In addition, in the case of SMBV, the roasting know-how and curves appear to constitute a technical specification according to which the roasting should proceed due to a preference or a choice of the purchasing company.
In the SMBV APA, the Dutch tax administration further accepted that the level of the royalty payment from SMBV to Alki LP would be determined at the end of each year as the difference between the realised operating profit before royalty expenses and the aforementioned [9-12] % mark-up on operating expenses. The SMBV APA further provides that ‘this royalty payment is deductible for corporate income tax purposes wholesale accounting and is not subject to Dutch withholding tax’ (13). On 15 January 2014, a meeting was held between the Commission services and representatives of the Dutch tax administration in which the Commission services sought, among others, further clarifications on the adjustments made to the cost base in the transfer pricing report as regards the SMBV APA and the fluctuating royalty payments made by SMBV.
古賀 剛志
