• +44 20 3286 8868
  • +1 747 212 0206
  • +86 21 2052 0623

Blog

Take advantage of our free expert resources, written by the experts at LCN Legal, based on their practical experience of working with multinational groups and their advisers across the globe. If you are interested in these areas, you may wish to bookmark this page to check back regularly for new information.

New Collaboration: LCN Legal and EXA Operational Transfer Pricing

Paul Sutton

We are very excited to announce a new collaboration between LCN Legal and EXA AG, that brings together EXA AG’s unique Operational Transfer Pricing solutions and LCN Legal’s know-how regarding the creation and maintenance of tax-audit ready Intercompany Agreements which multinational groups need for their transfer pricing compliance. EXA is a leading provider of digital […]

Intercompany Agreements

TP functions vs legal transactions

Paul Sutton

One of the perennial challenges in the legal implementation of transfer pricing policies is reconciling differing perspectives: those of functional analysis on the one hand, and legal rights and obligations on the other. A classic example is routine returns for distribution and production functions, as in the recent Coca-Cola case. As the US Tax Court […]

Intercompany Agreements

Price setting vs outcome testing in Germany and Poland

Paul Sutton

The following article has been kindly contributed by Dr Harold McClure, a New-York based economist who has over 25 years of transfer pricing experience. Dr. McClure received his Ph.D. in economics from Vanderbilt University in 1983 and began his transfer pricing career at the IRS. He later worked at several Big 4 accounting firms, Law […]

Intercompany Agreements

The two types of profit split arrangements in transfer pricing

Paul Sutton

In commercial relationships as in intra-group structures, there are two types of profit split arrangements. In both types, the participants to the arrangement may make (a) an up front contribution of cash or assets, and/or (b) ongoing contributions of services. The distinction is in the nature of the interest which each participant receives. A Type […]

Group Reorganisations

Intercompany Agreements

Video Interview: Update on HMRC's Profit Diversion Compliance Facility

Paul Sutton

Many thanks to Ken Almand for sharing his insights and updates on HMRC’s Profit Diversion Compliance Facility (PDCF), including his commentary on HMRC’s webinar last week. Questions we discussed included: * Did HMRC’s webinar on 6th October tell us anything new? * What have we learned from our experiences with the PDCF so far? In which situations […]

Interviews

Intercompany Agreements

Winners: Excellence in International Legal Services

Paul Sutton

My colleagues and I were humbled that our firm was shortlisted for the Law Society’s 2020 Excellence Awards, alongside firms like Baker McKenzie, Dentons, King & Spalding, Reed Smith, Societe Generale and Travers Smith. We were even more humbled that we actually won last week, in the category of ‘Excellence in International Services’. A result […]

LCN Updates

Intercompany Agreements

Preparing for Transfer Pricing Audits: Bayer’s Battle with the Canadian Revenue Agency

Paul Sutton

The following article is part of a series of case studies and articles which have been kindly contributed by Dr Harold McClure, a New-York based economist who has advised in the area of transfer pricing for many years. Action 13 of the Base Erosion and Profit Shifting project requires large multinationals to prepare a Master […]

Intercompany Agreements

Building something that stands up

Paul Sutton

Apparently, the IRS believes that the quality of transfer pricing documentation may have declined. (See its FAQ guidance issued in April this year.) They believed it necessary to remind practitioners that TP documentation needs to be consistent with risk allocation in intercompany agreements. Isn’t that like having to remind a glazier that the glass has […]

Intercompany Agreements

Where's your allotment?

Paul Sutton

Allotment (noun) a plot of land rented by an individual for growing vegetables or flowers. In my ignorance, I thought that allotments were something quintessentially British. But it turns out that it’s a phenomenon that exists all over the world. The one pictured above is in the village of Lindfield, West Sussex, where we live. […]

Intercompany Agreements

China Handbags Case Study 14.2 and the Abuse of the Deductive Value Method

Paul Sutton

The following article is part of a series of case studies and articles which have been kindly contributed by Dr Harold McClure, a New-York based economist who has advised in the area of transfer pricing for many years. In our previous discussion of customs valuations in China, we presented a hypothetical example to capture the […]

Intercompany Agreements

Case study on TP and customs compliance: impact of alternative payment flows and the treatment of advertising costs

Paul Sutton

The following article is part of a series of case studies which have been kindly contributed by Dr Harold McClure, a New-York based economist who has advised in the area of transfer pricing for many years. In an earlier paper on the application of the modified Resale Price Method (MRPM) for customs valuation purposes, I […]

Intercompany Agreements

Do you have a protocol for handling TP audits?

Paul Sutton

One of the things I love about attending conferences like TP Minds International last week, is that (as an adviser) you get insights into the real-life practicalities of managing TP risks, as opposed to just high level theory and crystal ball-gazing. One of the polling questions we asked on the panel session I hosted on […]

Intercompany Agreements

How to avoid mismatches between ‘economic’ and ‘legal’ ownership of IP

Paul Sutton

In the ‘bad old days’ of TP, many advisers appeared to take a fatalistic view of intangibles and intellectual property: the economic analysis of IP ownership took place in its own separate silo, and no attempt was made to reconcile that with legal and commercial rights. The problem with this approach is that it results […]

Intercompany Agreements

A common misconception amongst tax and TP professionals

Paul Sutton

One misconception that we hear time and time again from well-meaning TP advisers is the recommendation of putting variables such as mark-up percentages in an appendix to an intercompany agreement, ‘so that they can be updated easily.’ The idea is apparently that the relevant page can just be ‘swapped out’ on an annual basis. It […]

Intercompany Agreements

New video: how to scope out transactions for intercompany agreements

Paul Sutton

Accurately scoping out intercompany transactions is the essential first step in creating, reviewing or updating intercompany agreements for TP compliance. Unless this is done correctly, the resulting agreements are likely to be gibberish, and your TP objectives may fail for lack of legal implementation. As I’m sure you know, the need for alignment between intercompany […]

Intercompany Agreements

Checklist for intercompany agreements for support services

Paul Sutton

As part of our series of checklists for creating, reviewing and updating intercompany agreements, we’ve published a new checklist covering business support services (including head office, back office, strategic management services, marketing services and other services not ‘resold’ to third parties). You can download it here. If you have any feedback on how the checklist […]

Intercompany Agreements

Checklist for intercompany agreements for the distribution or resale of goods

Paul Sutton

Sometimes, you just want to have the information with no fluff or fuss. We’ve created a three-page checklist for creating, reviewing or updating intercompany agreements for the distribution or resale of goods. You can download it here. You might be wondering why we share this kind of information for free. It’s because one of our […]

Intercompany Agreements

Quick-start workshops for revising your group’s Transfer Pricing agreements

Paul Sutton

I’ve lost count of the number of transfer pricing articles I’ve read over the last couple of months which tell their readers to “review your transfer pricing policies” and “update your intercompany agreements” in the light of recent economic circumstances. This is undoubtedly good advice. The problem is that few TP or tax professionals know […]

Intercompany Agreements

Proposed new mandatory OECD content for TP Master Files and Local Files

Paul Sutton

As I’m sure you already know, the OECD’s TP Guidelines already specify that master files and local files must include the following information: Master files: “A list of important agreements among identified associated enterprises related to intangibles, including cost contribution arrangements, principal research service agreements and licence agreements.” (OECD Transfer Pricing Guidelines 2017, Annex I […]

Intercompany Agreements

Q&A on practicalities of digitising cash management for large corporates

Leiza Bladd-Symms

As some of you may already know, over the past few months we have been working closely with Adjoint Inc; a market leader in digitising corporate cash management services. Combining our legal expertise in intercompany agreements with Adjoint’s real time treasury provision, we have collaborated to create a novel and holistic offering for MNE’s which […]

Intercompany Agreements

Free Guide: Effective Intercompany Agreements for TP Compliance

ENQUIRE NOW