Ninth Circuit Upholds Amazon.com's Cost-Sharing Valuation

On August 16, 2019, the Ninth Circuit upheld Amazon's cost-sharing arrangement and valuation of its intangible assets, ¹ affirming the Tax Court's 2017 decision. ² In essence, the holding confirms that U.S. companies transferring all intangibles to foreign subsidiaries need not include global goodwill and going concern value of the business when calculating the mandatory buy-in payment (at least with respect to pre2009 cost-sharing regulations).

In 2005 and 2006, Amazon restructured its European business and subsidiaries. As part of this restructuring, Amazon formed a new European holding company (Amazon Europe Holdings Technologies SCS or "AEHT") and transferred to it all pre-existing European subsidiaries, their operating assets, and their pre-existing intangible rights. The two entities, Amazon and AEHT, then entered into a cost-sharing arrangement for the pre-existing intangibles that Amazon contributed, pursuant to which both entities became co-owners of the