Supply Chain Restructuring
Byline: Imran Khan
Companies commercially restructuring their operations (e.g. moving manufacturing, centralising distribution, moving intellectual property etc), must consider a plethora of legislation, case law and practice when determining what, if any, tax implications there may be. In line with most other European countries the issues commonly encountered include: Deemed disposal of intangible assets, especially when these are linked to contracts or specific intellectual property rights Transfer pricing before and after the restructure (including revaluating debt capacity) Tax deductibility of restructuring costs Interaction with Controlled Foreign Companies rules, domestic anti-avoidance, withholding taxes and other potentially relevant provisions Permanent establishment risk, especially "dependant agent" It is therefore no surprise that tax has moved up the agenda and into the boardroom when considering business restructurings.
However, it needn't all be the doom and gloom of having to manage a minefield of tax issues and risks. Aligning tax strategy appropriately to commercial objectives can not only manage the tax risks but bring with it the opportunity to drive tax efficiency, ensuring only the correct amount of tax is actually payable.
Imran Khan One example is the centralisation of procurement as it may offer opportunities to control procurement spending, increase working capital and free cash. …