Biotech Success in Switzerland and the Bay Area -
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Biotech Success in Switzerland and the Bay Area - Biotech Success in Switzerland and the Bay Area - Presentation Transcript

  • European Expansion Involving Intellectual Property The Swiss Perspective Thomas Linder San Francisco, January 9th, 2013© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 1
  • ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 2
  • US tax law:Basics of IP Planning
  • Business Advantages and Potential Tax Benefits  Potential business purposes − Integrate newly acquired operations − Centralize management functions by region − Eliminate redundancies − Consolidate IP ownership and entrepreneurial risk to make the enterprise more nimble − Provide greater focus on non-US markets  Potential tax benefits − Reduce financial reporting effective tax rate − Reduce global cash tax rate© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 4
  • Key Issues to Be Addressed  Jurisdiction of IP HoldCo and Principal Co  Need to move or hire new personnel in principal location  Character of future revenues for US and non-US tax purposes − Important for subpart F and withholding taxes  Conversion transactions from current structure − IP “buy-ins” − De-risking of manufacturers and distributors − Corporate restructuring to facilitate cash movements  Future IP ownership and funding structure  Future transfer pricing policies© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 5
  • IP Ownership Alternatives Option Pros Cons  No upfront US exit tax cost (PCT) or  Permanent commensurate with income risk License from foreign exit tax cost  High tax rate unless FTCs available USP  “Hedge” if foreign profit goals not met  Significant tax benefit potential if foreign  Periodic adjustment trigger in 1.482-7 ops successful  Potential tax detriment if foreign ops profit Qualified  Netting foreign IP with U.S. allowed goals not met Cost Sharing  Other safe harbors apply (U.S. T/B, partnership)  Significant tax benefit potential if foreign  No netting against foreign IP -- cross ops successful licensing risk; also outside other safe Nonqualified harbors Cost Sharing  Freedom to structure arm’s length terms without 1.482-7 restrictions  Potential tax detriment if foreign ops profit goals not met  Potentially no US exit tax cost (PCT) on transferred IP and/or royalty  Complexity of partnership allocations IP  Ongoing tax benefits of CSA available  Complexity of deferral planning Partnership  Special allocations can enhance tax planning© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 6
  • Switzerland
  • Low tax rates… Schaffhausen 16.0% Basel Thurgau Thurgau 22.5% 16.4% AR Aargau Aargau Zürich Z ü rich AI 21.3% BL Jura Jura 20.7% 18.9% 21.2% 12.7% 21.9%% SO St. St. Gallen Zug Zug Luzern Luzern Gallen Bern 15.1% 17.1% 21.0% 12.1% Schwyz Schwyz Glarus Neuchâtel 21.6% Glarus Neuchatel 14.0% OW NW 16.5% 12.7% Uri Uri 19.6% Bern 15.1% Graubünden Fribourg Fribourg Vaud Vaud 16.7% 23.5% Ticino Tessin Valais Valais 20.7% 24.2% 21.6% Genève© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 8
  • …but not a tax haven jurisdiction! Foreign Swiss Multinationals Multin. 24% of GDP 10%  Strong domestic industry  Export oriented Swiss Domestic Businesses  High production cost 66% of GDP© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 9
  • Swiss Mixed Company – Basic Concept  “Multi-purpose” vehicle Parent Co  Statutory ETR of 8.5 – 12%  Applies to Swiss branches of foreign companies as well  Reduction of tax base can lead Swiss to substantially lower ETR Company • Depreciation (IP) Income Expenses (80%) (80%) • Hybrid instruments • Branch exemption Foreign Company Foreign Company • Principal company Statutory ETR of 8.5 – 12% Further reduction of ETR through base erosion© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 10
  • Case Study 1: Pharmaceuticals US Parent Co Lux Holding Company Fee Mgt Contract Swiss Foreign Limited Manufacturers Principal Risk Distributors IP Customers ETR of 5 - 8%© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 11
  • Case Study 2: Internet based business US Parent Co Lux Holding Subscribers Company Mgt Fee Swiss Foreign Rep Headquarters Companies Market Royalty Support Fee Merchants Foreign IP Company IP ETR of 2 - 5%© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 12
  • Case Study 3: Electronics Parent Co Swiss NL Holding Principal Company IP Fee Mgt Foreign Limited Foreign Contract Foreign Risk Distributors Manufacturers Management Customers ETR of 2 - 5%© 2013 KPMG AG/SA, a Swiss corporation, is a subsidiary of KPMG Holding AG/SA, which is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMGInternational Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 13
  • Thomas LinderDirector, International Corporate TaxKPMG AGBadenerstrasse 1728004 ZurichEmail: tlinder@kpmg.comPhone: +41 44 249 23 07Mobile: +41 79 597 67 72