Behandlingen af CO2-kreditter på det uregulerede marked i et transfer pricing perspektiv

Abstract

The following master thesis will revolve around the complex discipline of determining the treatment of carbon credits in accordance with the arm’s length principle. All relevant in-formation regarding carbon credits will be presented as it will contribute to the later deter-mination of the relevant transfer pricing approach. During the thesis, the definition of a carbon credit, the verification of such credit and the definition of a carbon credit according to Danish law will be presented. This will lead the thesis into the accurate treatment of a carbon credit in accordance with the arm’s length principle. Transfer pricing is a complex discipline hence the quote from OECDs Transfer Pricing Guidelines 4.8. “.. transfer pricing is not an exact science..” There will be different ways to look upon a transfer pricing problem, and it gets even more relevant since the rise of environmental awareness. Climate changes and sustainability are becoming more of a priority for consumers. This contributes to the acknowledgment of these challenges for the businesses to establish themselves in a sustainable market. These points contribute to the motivation behind the following master thesis. Since the rise of en-vironmental awareness, it should be considered, if there could be an intercompany benefit to structure your business in a manner that could generate carbon credits. And certainly, how these intercompany benefits regarding specifically carbon credits should be handled in a transfer pricing perspective. The focus of the following master thesis is how carbon credits could be considered in inter-company transactions, and how they could manifest themselves in a project regarding envi-ronmental improvement. The premise of the thesis is not to determine in what way busi-nesses could structure themselves to obtain most economical value, but rather a theoretical approach regarding carbon credits in an intercompany transaction. The theoretical approach to the transfer pricing treatment of carbon credits should be based on the definition of a carbon credit. It has been deducted from data, presented within the thesis, regarding carbon credits, and emission reducing projects who can generate carbon credits, that a carbon credit can be identified as an intangible. The transfer pricing approach is therefore determined after the accurate definition as an intangible. The thesis determines that the primary reason for retiring carbon credits is associated with PR/branding and corporate social responsibility. For transfer pricing purposes it must there-fore be considered who the retirement of a carbon credits benefits. The primary benefits associated herewith are increases in brand value and trademarks whereby it is determined within this thesis that entities owning trademarks and brands can benefit from the retire-ment of carbon credits. They therefore carry the primary risk and benefits in this regard. Projects with a potential of generating carbon credits, should be looked upon as a transfer of both functions and assets. The potential for generation of carbon credits alone should be determined as an intangible and should be treated accordingly. It would be considered as two (or more) separate controlled transactions during a business reconstruction and should be looked upon separately in a transfer pricing perspective.

A master thesis from Aalborg University

Behandlingen af CO2-kreditter på det uregulerede marked i et transfer pricing perspektiv

[The treatment of voluntary carbon credits in a transfer pricing perspective]