HPP’s Senior Associate Aleksei Hanninen defended his doctoral thesis entitled “Transfer pricing of business restructurings from the perspective of Russian, Finnish and U.S. tax law” on 20 April 2018. Hanninen examines in his dissertation to what extent business restructurings may become objects of transfer pricing under the national transfer pricing regulations in Russia, Finland and the USA. The second research question is how the arm’s length transfer prices should be determined for transfers of such assets/something of value that are deemed to be in the scope of the national transfer pricing rules. In particular, the current Russian transfer pricing rules have not been examined broadly in international tax law research.
The research reveals that business restructurings fall more extensively within the scope of application of the national transfer pricing rules and the arm’s length principle in Finland and the USA in comparison with the existing situation in Russia. In Russia, only transfers of tangible property and intellectual properties seem to fall within the scope of the Russian transfer pricing rules in the business restructuring context, while in Finland and the USA the assets/items-of-value that are typically transferred in business restructurings seem to fall well within the scope of the national transfer pricing rules. This means that intangible assets transferred between related parties are also generally objects of transfer pricing had unrelated parties compensated transfers of such assets in corresponding situations. Moreover, related parties are required to examine on a case-by-case basis whether premature terminations or renegotiations of existing agreements should potentially be compensated and whether the restructuring should be regarded as a transfer of a going concern and thus examined as a whole.
Several uncertainty factors also may relate to the transfer pricing treatment of business restructurings. It is not entirely clear in all cases, inter alia, to what extent transfers of something of value (especially intangibles) fall within the scope of application of the national transfer pricing regulations and what the most appropriate transfer pricing method in a given case is. The best solution to address the uncertainties that relate to the transfer pricing of business restructurings is the conclusion of multilateral or bilateral advance pricing agreements (APAs) with tax authorities. In addition to APAs, the maintenance of a thorough transfer pricing documentation as well as the compliance with the transfer pricing reporting requirements may lead to potential transfer pricing disputes with tax authorities being avoided.