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The Future of the Profit Split Method by CAPELLERI

The Future of the Profit Split Method

Edited by Robert Danon, G. Maisto, Vikram Chand, Gabriella Cappelleri


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The Future of the Profit Split Method is a thoroughgoing book elucidating the profit split method (PSM). Among the various transfer pricing methods, the OECD’s Base Erosion and Profit Shifting (BEPS) project provided substantial guidance on the PSM in 2018. In this exhaustive and meticulous compendium – the first book to analyse this increasingly adopted transfer pricing method – notable scholars and practitioners working in the international tax community express their views on the method, answering some unresolved questions and highlighting issues that are still open and pending, especially in light of the digitalization of the economy.

What’s in this book:

The contributors have addressed the following pivotal issues:

  • choice of the appropriate splitting factors, their relative weights, and valuation of the contributions;
  • uncertainties and outcomes potentially not aligned with the arm’s-length standard;
  • possible role of assessments made by the European Commission on State aid;
  • nexus with the work done by the EU Joint Transfer Pricing Forum;
  • impact of profit split on indirect taxes (VAT/customs tax/excise tax); and
  • application to digital business models and, in general, to the digitalized economy.

This book also provides an in-depth comparative analysis and relevant experiences of applying this method in France, Germany, Italy, Spain, Switzerland, the United Kingdom, and the United States. A concluding chapter also deals with selected industry experiences.

How this will help you:

Considering a high level of uncertainty in alignment with international guidance in the application of the PSM – and to the underdeveloped nature of current literature on the subject – there is a need for this book because both tax administrations and taxpayers, henceforth, will apply the PSM extensively. The book is highly relevant for policymakers, tax administrations, practitioners and academics engaged in the areas of international taxation, transfer pricing and tax policy.


Publish Date 11/13/2020
Product Line Kluwer Law International
ISBN 9789403524306
SKU 10085098-0001
Table of Contents




Chapter 1 The Rise (and Fall?) of the Profit Split Method

Guglielmo Maisto

Part I. History and Evolution of the OECD Guidelines

Chapter 2 History and Evolution of the Profit Split Method in the OECD Guidelines

Paolo Valerio Barbantini

Chapter 3 The New Guidance of Chapter I of the OECD Guidelines

Xaver Ditz

Part II Revised Guidance on the Application of the Transactional Profit Split Method

Chapter 4 The BEPS Action Plan and Updating the OECD Guidance on Profit Splits Method

Andrew Hickman

Chapter 5 When Is a Transactional Profit Split Method the Most Appropriate Method?

Caroline Silberztein

Chapter 6 Application of the Profit Split Method

Harlow Higinbotham & Vladimir Starkov

Chapter 7 Administrative Approaches to Profit Split Method

Bruno Gibert & Celine Pasquier

Part III The Profit Split Method From Other Perspectives

Chapter 8 Potential State Aid Exposure in Case of Tax Rulings Based on the Profit Split Method

Gabriella Cappelleri & Mario Tenore

Chapter 9 The Work of the Joint Transfer Pricing Forum on the Profit Split Method

Mauro Faggion & Simone Di Vaia

Chapter 10 The Impact of Profit Split to Indirect Taxes, with Emphasis on European VAT

Andrea Parolini

Part IV Comparative Analysis

Chapter 11 A Comparative Analysis of the UN and OECD Approaches on the Transactional Profit Split Method and Formulary Apportionment

Michael Kobetsky

Part V Countries Experience

Chapter 12 Countries Experience: Status Quo and Likely Evolutions – France

Bruno Gibert

Chapter 13 Countries Experience: Status Quo and Likely Evolutions – Germany

Xaver Ditz

Chapter 14 Countries Experience: Status Quo and Likely Evolutions – Italy

Aurelio Massimiano & Marco Valdonio

Chapter 15 Countries Experience: Status Quo and Likely Evolutions – Spain

Joan Hortalà i Vallvé

Chapter 16 Countries Experience: Status Quo and Likely Evolutions – Switzerland

Raoul Stocker & Patrick Schmid

Chapter 17 Countries Experience: Status Quo and Likely Evolutions – United Kingdom (England and Wales)

Steve Edge & Alicia Tan

Chapter 18 Countries Experience: Status Quo and Likely Evolutions – United States

Yariv Brauner

Part VI Digital Business Models and Digitalization of the Economy

Chapter 19 Cross-Border allocation of MNEs Profits (Losses) in Light of the Digitalization of the Economy: An Assessment of Amount A, B and C

Vikram Chand

Chapter 20 Application of the Profit Split Method to Digital Business Models and to the Digitalization of the Economy

Vikram Chand

Part VII Selected Industry Experiences

Chapter 21 Selected Industry Experiences and Theoretical Approaches

Emmanuel Llinares & Amanda Pletz