Barnes Dennig Transfer Pricing After Tax Reform and COVID-19 120920 - BD | Page 22
REALIZING SAVINGS – UTILIZE TAX LOSSES
German parent with USCo subsidiary reseller
• ~$ 70m US revenue , purchases in Euros
• Facing market downturn
• Assume ParentCo income is $ 6m @ 30 % rate = $ 1.8m tax
USCo P & L |
2018 |
2019 |
2020 |
Total |
US Revenue |
$ 75.2m |
$ 70.3m |
$ 65.2m |
$ 210.7m |
EBIT * |
$ 0.9m |
$ 0 |
($ 2.5m ) |
($ 1.6m ) |
EBIT Margin |
1.1 % |
0 % |
( 3.8 %) |
( 0.7 %) |
* EBIT – Earnings Before Interest and Tax