Suppose Company A and Company B take a CCA in the first year to develop new technologies. At the beginning of the CCA, it is estimated that the development process will take five years and that once the new technology is commercialized in Year 6, Company A will receive 75% of the benefits and Company B will receive 25% of the benefits. The overall change amounts to 100 per year. B.6.4.2. Contributions to a CCA can be made in several forms. In the case of service-sharing agreements, contributions consist mainly of the provision of services. For development CCMs, contributions generally include development activities (for example. B research and development or marketing) and often include additional contributions relevant to a development CCA, such as. B other existing intangible assets that will contribute to the development of an intangible CCA. B.6.1.1. This chapter contains guidelines on the use of cost-contribution plans (CCAs) and the application of the arm length principle to CCAs for transfer pricing purposes. CCCs are contractual agreements between companies associated with a multinational group, in which participants share certain costs and risks in exchange for a reasonable interest in the expected outcomes of the CCA.
CCAs may also include independent parties. CCCs can be used for a variety of purposes, such as acquiring or creating tangible assets, acquiring or creating intangible assets, and providing intra-group services. With respect to intangible assets, the CCA will present the interests of each participant to the intangible assets to be developed. For services, the CCA determines what services each participant can receive. With respect to CCMs, which relate to tangible assets, the CCA determines the interests of each member of tangible assets. According to the tax authorities, the content of Christian Fishbacher S.p.A.`s contract with the brand`s Swiss parent company, which granted a limited right of use of the mark, did not justify a 3.5% royalty, plus 1.6% as a contribution to the brand`s promotion and development investments. The appelson judge found that exceeding the values considered “normal” in Circular 32 of 22.09.1980 […] The agreement may include provisions for compensation and/or changes to the contribution allocation after a reasonable period of time to reflect substantial changes in the proportion of benefits expected between participants; and cover the annual expenses of ACCC participants, the form of the cash contribution and the evaluation methods used, and the consistent application of accounting principles to participants. B.6.5.2. “Allocation keys” are often used by NMs as an indirect method of bringing together the future benefits of each CCA participant. A distribution key can be based on factors such as revenue, gross profit, net income, number of employees and capital. The distribution key used is a proxy to determine the link between the contribution and the member`s entitlement to the expected benefits; factors to be used must be determined based on the facts and circumstances of the CCA. B.6.4.5.
Although all contributions to value are assessed on the principle of arm length, it may be easier for participants to measure current contributions to thought costs. If this approach is adopted, the value attributed to existing contributions should recover the opportunity costs of ex ante`s obligation to pay through costs within the CCA. For example, a contractual agreement (i.e. the CCA) requiring existing staff to carry out work for the benefit of the CCA should reflect the opportunity costs of alternative research and development efforts (e.g. B the difference between the value of the use closest to the research and development staff versus the projected research and development costs) when the research and development carried out by the CCA must be assessed at costs.