The controlled participants may rebut the presumption set forth in paragraph (c)(2)(i) of this section to the satisfaction of the Commissioner. For example, if the platform resource is a research tool, then the controlled participants could rebut the presumption by establishing to the satisfaction of the Commissioner that, as of the date of the PCT, the tool is reasonably anticipated not only to contribute to the CSA Activity but also to be licensed to an uncontrolled taxpayer. In such case, the PCT Payments may need to be prorated as described in paragraph (c)(2)(iii) of this section ...

For purposes of a PCT, the PCT Payee’s provision of a platform contribution is presumed to be exclusive. Thus, it is presumed that the platform resource, capability, or right is not reasonably anticipated to be committed to any business activities other than the CSA Activity, as defined in paragraph (j)(1)(i) of this section, whether carried out by the controlled participants, other controlled taxpayers, or uncontrolled taxpayers ...

Whether the rights in intangibles relevant to a particular transaction involving the transfer of intangibles or rights in intangibles are exclusive or non-exclusive can be an important comparability consideration. Some intangibles allow the legal owner of the intangible to exclude others from using the intangible. A patent, for example, grants an exclusive right to use the invention covered by the patent for a period of years. If the party controlling intangible rights can exclude other enterprises from the market, or exclude them from using intangibles that provide a market advantage, that party may enjoy a high degree of market power or market influence. A party with non-exclusive rights to intangibles will not be able to exclude all competitors and will generally not have the same degree of market power or influence. Accordingly, the exclusive or non-exclusive nature of intangibles or rights in intangibles should be considered in connection with the comparability analysis ...

Following a restructuring of the Italien Piaggio group, SAS Piaggio France by a contract dated January 2 2007, was changed from an exclusive distributor of vehicles of the “Piaggio” brand in France to a commercial agent for its Italian parent company. The tax authorities held that this change had resulted in a transfer without payment for the customers and applied the provisions of article 57 of the general tax code (the arm’s length principle). A tax assessment was issued whereby the taxable income of SAS Piaggio France was added a profit of 7.969.529 euros on the grounds that the change in the contractual relations between the parties had resultet in a transfer of customers for which an independent party would have been paid. The Judgement of the Court The court helt in favor of the tax authorities and added an additional profit of 7.969.529 to the taxable income of the SaS Piaggio France for the transfer of customers to the Italian parent company. SAS Piaggio France had until 2007 an exclusive distribution activity in Franch of vehicles of the brand “Piaggio”, which were bought, imported and then resold in its own name to French dealers. For this activity, SAS Piaggio France had developed its own strategy for the French market. It has established and managed a vast network of dealers for which it determined the volumes and models to buy as well as its own commercial policy in terms of pricing and after-sales service. It also and assumed the risks of managing its stock of piaggio products of which it was the owner as well as the commercial risks resulting from possible unpaid or unsold goods. Under these conditions, SAS Piaggio France must be regarded as having created its own customer base – regardless of the strong reputation of the “Piaggio” brand in France – by the network of dealers and the corresponding business. In holding that the transformation of SAS Piaggio France from an exclusive distributor into a simple commercial agent for Piaggio and C SpA did not entail any transfer of customers that should be compensated, the judgement from the court administrative appeal was inexact in the legal characterization of the facts. Click here for translation Conseil_d_État_10ème_-_9ème_chambres_réunies_04_10_2019_418817_Inédit_au_recueil_Lebon ...