APPLICATION OF THE MAIN RULE Alain Cornet, Procter & Gamble 1 - PowerPoint PPT Presentation

A BUSINESS PERSPECTIVE ON THE APPLICATION OF THE MAIN RULE Alain Cornet, Procter & Gamble 1

C C O O It starts with an identified U U BUSINESS NEED, seeking the N N Customer T T BEST solution to meet the need, MNE R R including Service, Cost and HQ Y Y Process B A CALL CALL CENTER CENTER C SUPPORT? SUPPORT? O U MNE MNE N Sub C Sub A T R Y 2 C

C C Global contract O O Central procurement U U N N Supplier Customer T T CCP Business Agreement MNE R R (Call Center HQ Y Y Provider) B A Supplies BA directly to C subs O U MNE MNE N Sub C Sub A T R Y 3 C

C C O O U U Umbrella Agreement N N Supplier Customer T T CCP MNE R R (Call Center HQ Y Y Provider) B A Supplies BA directly to C subs O U MNE MNE N Sub C Sub A T R Y 4 C

• Similarity of needs? supply base? internal processes? Financial Conditions? Budget? Synergies? contractual complexity? local regulations? ...? • Different BUSINESS NEEDS will drive different relationships • It should not be VAT driving the choice 5

C C Global contract O O Central procurement U U Business Agreement N N Supplier Customer T T CCP MNE R R (Call Center HQ Y Y Provider) B A Supplies BA directly to C subs O U MNE MNE N Sub C Sub A T R Y 6 C

• Guideline 3.2 - The jurisdiction in which the customer is located has the taxing rights • Separate Legal entities as subsidiaries does NOT make a customer MLE. Legal entities are distinct [3.46-3.48]. • An establishment requires sufficient infrastructure. VAT registration is NOT an establishment [Footnote 24] • What is done with the supply, who receives it, who pays for it is irrelevant [3.47 sv] 7

• Guideline 3.3 - The identity of the customer is determined by reference to the business agreement. • Business agreement: elements that identify the parties to a supply and the rights and obligations with respect to that supply (box 3.1) • Not just “written contracts” (3.10), might include policies, purchase orders, correspondence, ... • Looking at the network of elements that show what the parties agreed 8

Global contract C C Central procurement O O U U Business Agreement N N Supplier Customer T T CCP MNE R R Zero- (Call Center TAX (R/C) HQ Y Y rate Provider) Zero- rate B A Zero- rate BA TAX TAX C (R/C) (R/C) O U MNE MNE N Sub C Sub A T R Y 9 C

C C O O U U Umbrella Agreement N N Supplier Customer T T CCP MNE Zero-rate R R (Call Center HQ Y Y Provider) B A BA TAX TAX C (R/C) O U MNE MNE N Sub C Sub A T R Y 10 C

• Following the Business agreement • You also, follow normal business accounting and reporting arrangements and practices • Ensuring Clarity, traceability and simplicity • And resulting in a Fair & logical result 11

Next opportunities: 1. We need Global Adoption THANK YOU For your HELP 2. Realism on Time of taxation 12