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Compensating adjustments - An international perspective

Paladini Söderberg, Oskar LU (2018) LAGF03 20181
Department of Law
Faculty of Law
Abstract
The purpose of this essay is to investigate if there exist any differences in the handling of compensating adjustments between Sweden and the UK and why these differences exist together with what consequences it may bring.
Differences were identified, such as the fact that the UK only allows for compensating adjustments in an upward direction whilst Sweden accepts adjustments in both directions. The reason for the differences originated from a discrepancy in the interpretation of the OECD documents, such as the guidelines and the commentary, and how the ALP was interpreted, restrictive or extensive. Sweden interpreted the principle in accordance with its purpose and the UK argued for a prohibition of downwards adjustments due to the fact... (More)
The purpose of this essay is to investigate if there exist any differences in the handling of compensating adjustments between Sweden and the UK and why these differences exist together with what consequences it may bring.
Differences were identified, such as the fact that the UK only allows for compensating adjustments in an upward direction whilst Sweden accepts adjustments in both directions. The reason for the differences originated from a discrepancy in the interpretation of the OECD documents, such as the guidelines and the commentary, and how the ALP was interpreted, restrictive or extensive. Sweden interpreted the principle in accordance with its purpose and the UK argued for a prohibition of downwards adjustments due to the fact that independent enterprises always price ex-ante.
The consequences of the identified differences were considered to counteract the purpose of double taxation treaties in general. Further, the risk of economic double taxation was concluded to increase as a consequence of the described differences and is from an international perspective undesirable. It exist arguments, taking a state perspective, that motivates an interpretation similar the one taken by the UK but at the expense of the international endeavour to eliminate economic double taxation. (Less)
Abstract (Swedish)
Uppsatsen syftar till att utreda huruvida det existerar skillnader i hanteringen av compensating adjustments mellan Storbritannien och Sverige och utreda de underliggande anledningarna till dessa skillnader och vilka konsekvenser en olik hantering kan få.
Skillnader kunde identifieras, såsom att Storbritannien endast tillåter justeringar av vinster uppåt medan Sverige tillåter justeringar i båda riktningar. Skillnaderna berodde på en olik tolkning av OECDs riktlinjer och kommentar till modellskatteavtalet av de båda staterna som främst berörde huruvida en restriktiv eller extensiv tolkning, med syftet bakom principen som ledstjärna, av armlängdsprincipen har skett. I Sverige är det resultatet av transaktionerna som ska vara prissatt som... (More)
Uppsatsen syftar till att utreda huruvida det existerar skillnader i hanteringen av compensating adjustments mellan Storbritannien och Sverige och utreda de underliggande anledningarna till dessa skillnader och vilka konsekvenser en olik hantering kan få.
Skillnader kunde identifieras, såsom att Storbritannien endast tillåter justeringar av vinster uppåt medan Sverige tillåter justeringar i båda riktningar. Skillnaderna berodde på en olik tolkning av OECDs riktlinjer och kommentar till modellskatteavtalet av de båda staterna som främst berörde huruvida en restriktiv eller extensiv tolkning, med syftet bakom principen som ledstjärna, av armlängdsprincipen har skett. I Sverige är det resultatet av transaktionerna som ska vara prissatt som på ett armslängdsavstånd där Storbritannien å andra sidan ansågs tolka armlängdsprincipen ordagrant, på grund av antagandet att kompenserande justeringar aldrig hade förekommit hos orelaterade företag eftersom de alltid bestämmer priset för en transaktion i förväg.
Konsekvenserna av de identifierade skillnaderna ansågs motverka syftet med dubbelbeskattningsavtal och risken för ekonomisk dubbelbeskattning ökade i och med den skilda hanteringen, vilket ur ett internationellt perspektiv anses vara icke-önskvärt. Argument kunde identifieras från ett statligt perspektiv som motiverar en tolkning likt den av Storbritannien men på bekostnad av den internationella strävan att eliminera ekonomisk dubbelbeskattning. (Less)
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author
Paladini Söderberg, Oskar LU
supervisor
organization
course
LAGF03 20181
year
type
M2 - Bachelor Degree
subject
keywords
Skatterätt, finansrätt, fiscal law, transfer pricing, compensating adjustments, economic double taxation
language
English
id
8941265
date added to LUP
2018-07-09 16:24:54
date last changed
2018-07-09 16:24:54
@misc{8941265,
  abstract     = {The purpose of this essay is to investigate if there exist any differences in the handling of compensating adjustments between Sweden and the UK and why these differences exist together with what consequences it may bring. 
Differences were identified, such as the fact that the UK only allows for compensating adjustments in an upward direction whilst Sweden accepts adjustments in both directions. The reason for the differences originated from a discrepancy in the interpretation of the OECD documents, such as the guidelines and the commentary, and how the ALP was interpreted, restrictive or extensive. Sweden interpreted the principle in accordance with its purpose and the UK argued for a prohibition of downwards adjustments due to the fact that independent enterprises always price ex-ante. 
The consequences of the identified differences were considered to counteract the purpose of double taxation treaties in general. Further, the risk of economic double taxation was concluded to increase as a consequence of the described differences and is from an international perspective undesirable. It exist arguments, taking a state perspective, that motivates an interpretation similar the one taken by the UK but at the expense of the international endeavour to eliminate economic double taxation.},
  author       = {Paladini Söderberg, Oskar},
  keyword      = {Skatterätt,finansrätt,fiscal law,transfer pricing,compensating adjustments,economic double taxation},
  language     = {eng},
  note         = {Student Paper},
  title        = {Compensating adjustments - An international perspective},
  year         = {2018},
}