This is an outdated version published on 2023-08-31. Read the most recent version.
DEMPE Functions in Practice: The International Approach and Lessons Learned over the Last Years
DOI:
https://doi.org/10.33119/ASCASP.2023.1.1Keywords:
DEMPE, intangibles, transfer pricing, international tax law, licensing, CCAAbstract
The article discusses practical experiences with the application of the DEMPE concept over the years since its official introduction in the 2017 OECD Transfer Pricing Guidelines. Starting with placing the concept in the transfer pricing realm, the article then moves on to deal with the most common issues in its practical application, which include also an analysis of the application of the concept in Cost Contribution Arrangements. Finally, the article discusses the real-life application of the DEMPE concept in the countries such as Austria, Belgium, China, Germany, and India.
References
Colling Russo, C. & Karnath, S. (2019). Intercompany Licensing of Intangibles – A Comparative Global Outlook. International Transfer Pricing Journal. 6, 384.
Dhadphale, A. (2019). Concept of DEMPE and its Debut in Indian TP Litigation. Taxsutra. Retrieved from: https://www.taxsutra.com/tp/experts-corner/conceptdempe-and-its-debut-indian-tp-litigation
Dziwiński, K. (2022). The DEMPE Concept and Intangibles. Definition, Practical Approach and Analysis in the Context of Licence Model, Alphen aan den Rijn. The Netherlands: Kluwer Law International B.V., Chapter 3, 82–85, 161–165, 181–191.
Kost, O. & Weidlich, F. (2020). Möglichkeiten zur Operationalisierung einer DEMPE-Analyse. TPI Transfer Pricing International, 5, 235–338.
Lagarden, M. & Peng, C. (X.) (2019). DEMPE Functions and the RACI Concept – More Clarity or Confusio Ahead? International Transfer Pricing Journal, 26(1).
Markley, B. & Devroye, R. (2021). “Back to the future?” – Belgian Court rules that DEMPE concept cannot be applied retroactively. Wolter Kluwer International Tax Blog. Retrieved from: https://kluwertaxblog.com/2021/09/13/back-to-the-future-belgian-court-rules-that-dempeconcept-cannot-be-applied-retroactively/
Schoueri, L.E. (2015). Arm’s Length: Beyond the Guidelines of the OECD. Bulletin for International Taxation, 69(12), 714–716.
Screpante, M.S. (2019). Formulaic (or Formulary?!) Apportionment Wearing Value Creation Clothes: Is the Wolf Dressed in Sheep’s Clothing? Kluwer International Tax Blog. Retrieved from: https://kluwertaxblog.com/2019/09/10/formulaic-or-formulary-apportionment-wearing-value-creation-clothes-is-the-wolfdressed-in-sheeps-clothing/.
Screpante, M.S. (2019). Rethinking the Arm’s Length Principle and Its Impact on the IP Licence Model after OECD/G20 BEPS Actions 8-10: Nothing Changed but the Change? World Tax Journal, 11(3).
Stocker, R. & Schmid, P. (2018). Markenrechte: Entschädigung des rechtlichen Eigentümers vs Ausübung von DEMPE-Funktionen. TPI Transfer Pricing International, 4, 218.
Subramanian, P. (2017). Ten Questions on the OECD’s DEMPE Concept and Its Role in Valuing Intangibles. Bloomberg Tax Management Transfer Pricing Report, 26.
Wilkie, S. (2019). The Way We Were? The Way We Must Be? The ‘Arm’s Length Principle’ Sees Itself (for What It Is) in the ‘Digital Mirror’. Intertax, 47(12), 1098.
Yuan S. & Zhao A. (2017). Bulletin 6: China Completes the Revamping of Its Transfer Pricing Regime, International Transfer Pricing Journal, 24(4), 294. Legal Acts and Guidance and Court Decisions
Bundesministerium Finanzen (AT), VPR 2021. Verrechnungspreisrichtlinien 2021. GZ 2021-0.586.616. Retrieved from: https://findok.bmf.gv.at/findok?execution=e100000s1&dokumentId=ace379c96082-4d25-b31a-456515264bee
Bundesministerium der Finanzen (DE) of 8 June 2021. Gesetz zur Modernisierung der Entlastung von Abzugsteuern und der Bescheinigung der Kapitalertragsteuer (Abzugsteuerentlastungsmodernisierungsgesetz – AbzStEntModG). Retrieved from: https://www.bundesfinanzministerium.de/Content/DE/Gesetzestexte/ Gesetze_Gesetzesvorhaben/Abteilungen/Abteilung_IV/19_Legislaturperiode/Gesetze_Verordnungen/2021-06-08-AbzStEntModG/0-Gesetz.html
Bundesministerium der Finanzen (DE) of 14 July 2021. Verwaltungsgrundsätze Verrechnungspreise. Retrieved from: https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Internationales_Steuerrecht/Allgemeine_Informationen/2021-07-14-verwaltungsgrundsaetze-verrechnungspreise.pdf?__blob=publicationFile&v=6
Circulaire 2020/C/35 concernant les directives en matière de prix de transfert à l’intention des entreprises multinationales et des administrations fiscales. SPS Finances (25 February 2020). Retrieved from: https://eservices.minfin.fgov.be/myminfin-web/pages/fisconet/document/25aa2105-24d3-4b13-89dd-2f9ba7db7e63
Income Tax Appellate Tribunal of 23 August 2019, M/s L’Oréal India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, Circle 7(1)(2), TS-829-ITAT-2019(Mum)-TP, ITA No. 7194/Mum/2017.
OECD (2015). Executive summary, Aligning Transfer Pricing Outcomes with Value Creation. Actions 8-10: 2015 Final Reports, OECD/G20 Base Erosion and Profit Shifting Project. Paris: OECD.
SAT Public Notice (2017) No. 6 of 22 November 2017. Public Notice of the State Administration of Taxation on Issuing the “Administrative Measures of Special Tax Investigation and Adjustment and Mutual Agreement Procedure”. Retrieved from: http://www.chinatax.gov.cn/download/pdf/20171122.pdf
SPS Finances, 25.02.2020. Circulaire 2020/C/35 concernant les directives en matière de prix de transfert à l’intention des entreprises multinationales et des administrations fiscales. SPS Finances. Retrieved from: https://eservices.minfin.fgov.be/myminfin-web/pages/fisconet/document/25aa2105-24d3-4b13-89dd-2f9ba7db7e63
Verwaltungsgerichtshof (AT)/Austrian Supreme Administrative Tribunal of 27 February 2020, Ra 2019/15/0162. Retrieved from: https://www.ris.bka.gv.at/Dokument.wxe?ResultFunctionToken=98a9e257-9c50-4ec3-8a96-11f3003a5523&Position=1&Abfrage=Vwgh&Entscheidungsart=Erkenntnis&Sammlungsnummer=&Index=&AenderungenSeit=Undefined&SucheNachRechtssatz=False&SucheNachText=True&GZ=&VonDatum=&BisDatum=&Norm=&ImRisSeitVonDatum=&ImRisSeitBisDatum=&ImRisSeit=EinemMonat&ResultPageSize=50&Suchworte=&Dokumentnummer=JWT_2019150162_20201127L00
Dhadphale, A. (2019). Concept of DEMPE and its Debut in Indian TP Litigation. Taxsutra. Retrieved from: https://www.taxsutra.com/tp/experts-corner/conceptdempe-and-its-debut-indian-tp-litigation
Dziwiński, K. (2022). The DEMPE Concept and Intangibles. Definition, Practical Approach and Analysis in the Context of Licence Model, Alphen aan den Rijn. The Netherlands: Kluwer Law International B.V., Chapter 3, 82–85, 161–165, 181–191.
Kost, O. & Weidlich, F. (2020). Möglichkeiten zur Operationalisierung einer DEMPE-Analyse. TPI Transfer Pricing International, 5, 235–338.
Lagarden, M. & Peng, C. (X.) (2019). DEMPE Functions and the RACI Concept – More Clarity or Confusio Ahead? International Transfer Pricing Journal, 26(1).
Markley, B. & Devroye, R. (2021). “Back to the future?” – Belgian Court rules that DEMPE concept cannot be applied retroactively. Wolter Kluwer International Tax Blog. Retrieved from: https://kluwertaxblog.com/2021/09/13/back-to-the-future-belgian-court-rules-that-dempeconcept-cannot-be-applied-retroactively/
Schoueri, L.E. (2015). Arm’s Length: Beyond the Guidelines of the OECD. Bulletin for International Taxation, 69(12), 714–716.
Screpante, M.S. (2019). Formulaic (or Formulary?!) Apportionment Wearing Value Creation Clothes: Is the Wolf Dressed in Sheep’s Clothing? Kluwer International Tax Blog. Retrieved from: https://kluwertaxblog.com/2019/09/10/formulaic-or-formulary-apportionment-wearing-value-creation-clothes-is-the-wolfdressed-in-sheeps-clothing/.
Screpante, M.S. (2019). Rethinking the Arm’s Length Principle and Its Impact on the IP Licence Model after OECD/G20 BEPS Actions 8-10: Nothing Changed but the Change? World Tax Journal, 11(3).
Stocker, R. & Schmid, P. (2018). Markenrechte: Entschädigung des rechtlichen Eigentümers vs Ausübung von DEMPE-Funktionen. TPI Transfer Pricing International, 4, 218.
Subramanian, P. (2017). Ten Questions on the OECD’s DEMPE Concept and Its Role in Valuing Intangibles. Bloomberg Tax Management Transfer Pricing Report, 26.
Wilkie, S. (2019). The Way We Were? The Way We Must Be? The ‘Arm’s Length Principle’ Sees Itself (for What It Is) in the ‘Digital Mirror’. Intertax, 47(12), 1098.
Yuan S. & Zhao A. (2017). Bulletin 6: China Completes the Revamping of Its Transfer Pricing Regime, International Transfer Pricing Journal, 24(4), 294. Legal Acts and Guidance and Court Decisions
Bundesministerium Finanzen (AT), VPR 2021. Verrechnungspreisrichtlinien 2021. GZ 2021-0.586.616. Retrieved from: https://findok.bmf.gv.at/findok?execution=e100000s1&dokumentId=ace379c96082-4d25-b31a-456515264bee
Bundesministerium der Finanzen (DE) of 8 June 2021. Gesetz zur Modernisierung der Entlastung von Abzugsteuern und der Bescheinigung der Kapitalertragsteuer (Abzugsteuerentlastungsmodernisierungsgesetz – AbzStEntModG). Retrieved from: https://www.bundesfinanzministerium.de/Content/DE/Gesetzestexte/ Gesetze_Gesetzesvorhaben/Abteilungen/Abteilung_IV/19_Legislaturperiode/Gesetze_Verordnungen/2021-06-08-AbzStEntModG/0-Gesetz.html
Bundesministerium der Finanzen (DE) of 14 July 2021. Verwaltungsgrundsätze Verrechnungspreise. Retrieved from: https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Internationales_Steuerrecht/Allgemeine_Informationen/2021-07-14-verwaltungsgrundsaetze-verrechnungspreise.pdf?__blob=publicationFile&v=6
Circulaire 2020/C/35 concernant les directives en matière de prix de transfert à l’intention des entreprises multinationales et des administrations fiscales. SPS Finances (25 February 2020). Retrieved from: https://eservices.minfin.fgov.be/myminfin-web/pages/fisconet/document/25aa2105-24d3-4b13-89dd-2f9ba7db7e63
Income Tax Appellate Tribunal of 23 August 2019, M/s L’Oréal India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, Circle 7(1)(2), TS-829-ITAT-2019(Mum)-TP, ITA No. 7194/Mum/2017.
OECD (2015). Executive summary, Aligning Transfer Pricing Outcomes with Value Creation. Actions 8-10: 2015 Final Reports, OECD/G20 Base Erosion and Profit Shifting Project. Paris: OECD.
SAT Public Notice (2017) No. 6 of 22 November 2017. Public Notice of the State Administration of Taxation on Issuing the “Administrative Measures of Special Tax Investigation and Adjustment and Mutual Agreement Procedure”. Retrieved from: http://www.chinatax.gov.cn/download/pdf/20171122.pdf
SPS Finances, 25.02.2020. Circulaire 2020/C/35 concernant les directives en matière de prix de transfert à l’intention des entreprises multinationales et des administrations fiscales. SPS Finances. Retrieved from: https://eservices.minfin.fgov.be/myminfin-web/pages/fisconet/document/25aa2105-24d3-4b13-89dd-2f9ba7db7e63
Verwaltungsgerichtshof (AT)/Austrian Supreme Administrative Tribunal of 27 February 2020, Ra 2019/15/0162. Retrieved from: https://www.ris.bka.gv.at/Dokument.wxe?ResultFunctionToken=98a9e257-9c50-4ec3-8a96-11f3003a5523&Position=1&Abfrage=Vwgh&Entscheidungsart=Erkenntnis&Sammlungsnummer=&Index=&AenderungenSeit=Undefined&SucheNachRechtssatz=False&SucheNachText=True&GZ=&VonDatum=&BisDatum=&Norm=&ImRisSeitVonDatum=&ImRisSeitBisDatum=&ImRisSeit=EinemMonat&ResultPageSize=50&Suchworte=&Dokumentnummer=JWT_2019150162_20201127L00
Downloads
Published
2023-08-31
Versions
- 2024-03-22 (2)
- 2023-08-31 (1)
How to Cite
[1]
Dziwiński, K. 2023. DEMPE Functions in Practice: The International Approach and Lessons Learned over the Last Years. Analysis and Studies CASP. 15, 1 (Aug. 2023), 1–12. DOI:https://doi.org/10.33119/ASCASP.2023.1.1.
Issue
Section
Articles
License
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal. All authors agree for publishing their email adresses, affiliations and short bio statements with their articles during the submission process.
Author agrees to share his work under CC-BY-NC license.
