March 24, 2020

Bloomberg Tax Quotes Friedemann Thomma on COVID-19’s Effect on Intercompany Tax Planning

1 min

On March 24, 2020, Friedemann Thomma was quoted in Bloomberg Tax about intercompany tax planning for multinational companies amid the economic disruptions caused by COVID-19.

According to the article, multinational companies follow transfer pricing rules that require them to value assets they buy and sell between their related parties in the same way unrelated parties would—acting at arm’s length, based on examples of comparable transactions. Companies allocate the majority of profits to the entity that takes on risks, performs critical functions, makes investments, or develops or holds intellectual property.

But with economies around the world grinding to a halt, companies may see their related parties booking losses instead. “2020 will be different because at the end of the day, we all know there will be just losses,” said Thomma. “It’s no longer an income allocation, it’s a loss allocation.”

Click here to access the article.