The objective is to bring commissionaire arrangements within the framework of dependent agency PE. Companies are converting commissionaire to LRD. Once a commercial and tax-efficient structure is determined— one that addresses both historical and potential risk – it is time to take the theory behind the structure into the realm of practice.
Moving away from commissionaire structure
As businesses are facing global challenges it makes sense that the existing business model is reevaluated and amended when necessary to meet the new PE environment. A less risky model is the limited risk distributor (LRD).
That most likely means moving away from a commissionaire structure. Principal company sells to a master sales company (e.g., in the same country as the principal company) under a LRD agreement, and the master sales company resells through its local branches.
Note that the tax authorities might have an extra interest in auditing the conversion.