Company may have enjoyed an “unfair advantage” from its method of calculating IP royalties
KPMG's E.U. Tax Centre reports that the European Commission is investigating whether the Netherlands allowed a multinational corporation to enjoy an "an unfair advantage over its competitors" when it granted the company a favourable outcome in certain tax rulings. The tax rulings allowed the corporation to use a certain method to calculate royalty payments on intellectual property paid by two of its Netherlands-based corporate entities.
From 2006 to 2015, the Dutch tax authorities issued five tax rulings-two of which are still in force-which effectively allowed the two entities to only be taxed in the Netherlands on a limited operating margin based on sales. This outcome was the result of the method the corporation used to calculate the royalties paid by the Dutch entities for the use of the intellectual property.
This investigation is one of several other similar inquiries into possible state aid granted by the Netherlands, Luxembourg and Ireland to other multinational companies.
For more details, see KPMG E.U.'s TaxNewsFlash, "EU: Tax rulings granted by Netherlands to multinational corporation".
For more information, contact your KPMG adviser.
Information is current to January 22, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500
© 2020 KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.