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

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

C O U N T R Y B

Customer MNE HQ MNE Sub A

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MNE Sub C

C O U N T R Y A C O U N T R Y C CALL CENTER SUPPORT? CALL CENTER SUPPORT?

It starts with an identified BUSINESS NEED, seeking the BEST solution to meet the need, including Service, Cost and Process

Supplier CCP

(Call Center Provider)

C O U N T R Y B

Customer MNE HQ MNE Sub A

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MNE Sub C

Supplies directly to subs

Global contract Central procurement

Business Agreement

BA

C O U N T R Y A C O U N T R Y C

Supplier CCP

(Call Center Provider)

C O U N T R Y B

Customer MNE HQ MNE Sub A

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MNE Sub C

Supplies directly to subs

Umbrella Agreement

BA

C O U N T R Y A C O U N T R Y 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

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Supplier CCP

(Call Center Provider)

C O U N T R Y B

Customer MNE HQ MNE Sub A

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MNE Sub C

Supplies directly to subs

Global contract Central procurement

Business Agreement

BA

C O U N T R Y A C O U N T R Y 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]

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• 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

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Supplier CCP

(Call Center Provider)

C O U N T R Y B

Customer MNE HQ MNE Sub A

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MNE Sub C

Global contract Central procurement

Business Agreement

BA

C O U N T R Y A C O U N T R Y C

Zero- rate Zero- rate Zero- rate

TAX (R/C)

TAX (R/C) TAX (R/C)

Supplier CCP

(Call Center Provider)

C O U N T R Y B

Customer MNE HQ MNE Sub A

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MNE Sub C

Umbrella Agreement

BA

C O U N T R Y A C O U N T R Y C

Zero-rate

TAX TAX (R/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

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Next opportunities:

• 1. We need Global Adoption

THANK YOU For your HELP

• 2. Realism on Time of taxation

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