Arm's Length Intragroup Intangible Transfers: Economics, Regulations and Actual Behaviors

BOCCONI UNIVERSITY -ECONPUBBLICA Working Paper No. 108

64 Pages Posted: 28 Jan 2006 Last revised: 1 Aug 2018

See all articles by Andrea Musselli

Andrea Musselli

Studio Musselli - Economic, Tax and Legal Advisors

Date Written: January 1, 2006

Abstract

Despite coherence between the economic arm's length principle and fiscal regulations about intragroup intangible transfers, some studies suppose that multinationals shift profits to affiliates where they are taxed lightly; the reaction of Countries' Administrations seems to be to arrange audits only to raise revenues, but holding arm's length principle in contempt.

This situation "is going into a spin" because the conduct of multinationals is also stimulated by non-arm's length Administration audits.

A way to mitigate this problem (at least to stop the "going into a spin") could be for different Countries to agree, in International Tax treaties, that their disputes on enforcing the arm's length principle should be arbitrated by a Third party Authority and not by internal Tax Courts. However in doing so, Countries would loose part of their fiscal sovereignty and they do not seem ready for that yet.

Keywords: Arm's, economics, regulations, transfer pricing

Suggested Citation

Musselli, Andrea, Arm's Length Intragroup Intangible Transfers: Economics, Regulations and Actual Behaviors (January 1, 2006). BOCCONI UNIVERSITY -ECONPUBBLICA Working Paper No. 108, Available at SSRN: https://ssrn.com/abstract=878443 or http://dx.doi.org/10.2139/ssrn.878443

Andrea Musselli (Contact Author)

Studio Musselli - Economic, Tax and Legal Advisors ( email )

Italy

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