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Because of the unprecedented business and economic disruption caused by the COVID-19 pandemic, companies are considering defenses that might excuse non-performance of a contract, such as invoking force majeure clauses, or potentially less drastic options such as renegotiating contractual terms. In some cases, companies have already begun to file suit to invoke force majeure clauses.

This article, part of Baker McKenzie and Bloomberg Tax’s Special Report, discusses the transfer pricing implications of companies seeking (or not seeking) to effectively invoke force majeure clauses in intercompany agreements, as well as similar contractual considerations in the absence of a force majeure clause.

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Author

Brian Arthur is a partner in Baker McKenzie's New York office, where he advises on international and US federal taxation. Mr. Arthur regularly presents on transfer pricing and international tax issues for organizations such as Bloomberg BNA and various Firm client seminars. He has also authored several articles on these topics.

Author

In her role as Principal Economist in the Firm’s Transfer Pricing Practice Group, Michelle Martinez leads the Chicago-based team of economists in providing multinational companies with economic analyses and valuations to assist them in preparing transfer pricing support for jurisdictions around the world. A particular focus of Ms. Martinez’s practice has been the structuring and valuation of intercompany transactions of intangible property, assisting clients with licensing, cost-sharing and business reorganizations. International Tax Review as a Leading Practitioner in their annual Women in Tax Leaders Guide (2016-2019).

Author

Xavier Vinyals Mirabent is a Senior Financial Analyst International Tax in Baker McKenzie's Amsterdam office.

Author

Kent Stackhouse is a member of the Firm’s North America Tax Practice Group in Amsterdam, where he mainly practices in the area of US federal taxation of corporations. Prior to that, he was a member of the Firm’s Washington, DC office. Kent is a former teaching associate at Georgetown University Law Center for an international tax and business planning course. He also is a frequent speaker at tax conferences.

Author

Antonio A. Weffer is a tax principal in Baker McKenzie's Tax Practice Group and the head of the firm's transfer pricing practice in Luxembourg. Antonio is an active member of several international professional tax organizations, and regularly publishes articles on international tax issues and speaks at worldwide seminars and conferences. He was ranked Band 2 in the World Transfer Pricing 2017 guide.