You are the tax department of Ricorivezle plc.  Your Board of Directors has heard about the OECD’s BEPS initiative and wishes to be informed as to how the initiative

is likely to impact on the Ricorivezle group worldwide.

Ricorivezle is an international group of companies in the publishing business.  Its core activities are:

•    The sale of print books and e-books on building standards around the world.
•    The provision of technical databases on building standards around the world which can be accessed by subscribers.  In some cases, the customer merely has the

right of access, but in countries where there is no Ricorvelze subsidiary company, the customers  may contract with Ricorvelze Bermuda to sub-licence rights of access

to the databases to clients of their own.
•    Whilst the information on the databases is publicly available in the countries to which it relates, the selling point of the database products is that the

databases are highly searchable and interactive
•    The provision of specific data upon request to clients in the construction industry, so that they do not have to trawl the databases themselves but can simply

request the required data, say, on construction industry standards in Thailand for  the building of textile factories.
•    The sale of monthly trade journals, both in print and via electronic subscriptions.  Back copies are held on a searchable database.
•    Running training courses on construction industry standards.  These courses are held in various locations around the globe.
•    Publishing training materials for the construction industry on construction standards.  These are only available in electronic form.

Ricorivelze plc, the ultimate holding company, is registered in the UK.  It has 20 wholly-owned operating subsidiaries around the world, including subsidiaries in the

UK, Australia, Tanzania, China, India  and the US.

The group’s intellectual property is owned by its Bermudan subsidiary.  The intellectual property consists mainly of copyrights over its published material and

technical know-how

A functional analysis of the group is given below:

All companies are tax resident in the country indicated by their name.

Functions performed    Assets controlled    Risks borne
Ricorivezle plc
(registered in the UK)    Holds shares in the group companies.

Maintains the shareholder register

Determines dividend policy

Determines the overall trading policies of the whole group.

Overseas recruitment of key personnel to the subsidiary companies

Acts as the group finance company    Shareholdings

Key strategic staff

Unused group financing amounts    Loss of key staff

Takeover bid for shares in Ricovelze plc

Financing risks
Ricorivezle UK Ltd
Develops the databases, using sophisticated indexing software which has been designed over the years by its own staff.  Also builds in to the materials a high degree

of interactiveness so that, e.g. a client can not only access a diagram or flowchart but can use it in an interactive way, allowing for greater complexity in the

materials as the clients can drill down to successive levels of detail.

Sublicensing of the databases to UK clients and clients in countries where there is no Ricovelze sub.

Develops training materials for use in a range of countries.  Usually, a client in a particular country will request  that training materials be developed, and after

developing the materials for that client, R UK  is able to sell the same set of materials to other clients in that country.

Authors content of UK journals on the database, buys in content from the other foreign subsidiaries for journals focussing on non-UK  territories, e.g, Asia-Pacific

Gathers material for the books from other subsidiaries, edits material, adds UK material and arranges for publishing and distribution of the books worldwide. The

copyright in the books is assigned to the Bermudan sub.

Employs experts in construction regulations for a number of countries and sends these experts abroad to client premises to deliver training courses, typically of 3 to

4 weeks duration.  Some clients buy about 10 of these training courses every year.
Database development software and knowhow

Client base

Skilled workforce

Sublicences for the databases.

Obsolescence of training materials

Emergence of competitors in database provision market

Defection of skilled staff who might use their knowledge to persuade clients to switch
Ricorivezle Bermuda Ltd.    Ownership and basic administration of the group’s intellectual property.

Licenses it to other group companies

Earns a net margin of 94%    The intellectual property

Staff: a group of skilled lawyers    Unsuccessful defence of copyrights and IP.
Ricorivezle India Ltd    Sub-licences databases from R. Bermuda ltd.

Grants licences to access these databases to Indian clients

Hosts and maintains the platform for the technical journals on behalf of the group. It makes a charge to the other group companies for this service according to the

number of subscribers to the various journals in each of the countries concerned.

Authors bespoke technical training materials for Indian clients.  These training materials incorporate material provided by R UK and R Australia, for which R India

pays a fee to the providers. All copyrights are transferred to the Bermuda company

Sub-licenses for the technical databases.

Database software and hardware for maintaining the journals platform.

Technical knowhow in relation to production of training materials

A group of skilled staff

Indian client base    Technical knowhow re platform hosting and maintenance

Skilled workforce
Ricorivezle (Financing) SAR
(resident in Luxembourg)    Acts as the group financing company.
Borrows in bulk from external banks.
Makes loans to the operating subsidiaries
Enters into tax-driven “repo” arrangements with Ricorvelze plc.
Deals with the group’s foreign currency requirements.    Cash balances

Shares in other group companies (on a temporary basis as part of the repo deals)    Interest rate risk,
Currency risk
(both these are usually hedged)
Other foreign operation subsidiaries    Sub-licence databases from Bermuda subsid.

Sub-sub licences made with in-country clients.

Author technical content relating to their country  for the books,  technical databases and the journals and sell this content to the UK sub.    Sublicences

Skilled workforces

Client base

Additional information;

To avoid withholding taxes, the group has set up an intermediate holding company in the Netherlands.   The Netherlands subsidiary holds sub-licences of all the group’s

intellectual property and passes on the royalties received from other group companies to the Bermudan subsidiary.

None of the group companies has a permanent establishment in any country at present.


Write a 2000 word report to the Board of Directors of Ricorivezle plc on the ways in which the BEPS initiative is likely to have an impact on the Group.

Your work should include your views as to the likely time scale of any impact on the group and the severity of the impact.  Is it likely that the Group will need to

change its policies and strategies in any way?  What additional tax compliance  might be created by the BEPS initiative

You are NOT required to deal with VAT issues.


•    Please refer to for the University’s guide to citation in the Harvard style.
•    Students with Additional Learning Needs may contact Learning Support on
•    General academic support is available via the Academic Skills community on myBU.
•    Additional support is provided by the School. International postgraduate students should contact your programme administrator,