Vistaprint 2012 Annual Report Download - page 32

28
access our websites if we do not have adequate security certificates could result in a material loss of revenue and
profits and damage to our brands.
Risks Related to Our Corporate Structure
Challenges by various tax authorities to our international structure could, if successful, increase our
effective tax rate and adversely affect our earnings.
We are a Dutch limited liability company that operates through various subsidiaries in a number of countries
throughout the world. Consequently, we are subject to tax laws, treaties and regulations in the countries in which we
operate, and these laws and treaties are subject to interpretation. From time to time, we are subject to tax audits
and claims by the tax authorities in these countries that a greater portion of the income of the Vistaprint N.V. group
should be subject to income or other tax in their respective jurisdictions, which could result in an increase to our
effective tax rate and adversely affect our results of operations. For more information about audits to which we are
currently subject refer to Note 11 “Income Taxes” in the accompanying notes to the condensed consolidated
financial statements included in Item 8 of Part II of this Report.
A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate
could result in a higher tax rate on our earnings, which could result in a significant negative impact on our earnings
and cash flow from operations. We continue to assess the impact of various international tax proposals and
modifications to existing tax treaties between the Netherlands and other countries that could result in a material
impact on our income taxes. We cannot predict whether any specific legislation will be enacted or the terms of any
such legislation. However, if such proposals were enacted, or if modifications were to be made to certain existing
treaties, the consequences could have a materially adverse impact on us, including increasing our tax burden,
increasing costs of our tax compliance or otherwise adversely affecting our financial condition, results of operations
and cash flows.
Our intercompany, including transfer pricing, arrangements may be challenged, resulting in higher taxes or
penalties and an adverse effect on our earnings.
We operate pursuant to written intercompany service and related agreements, which we also refer to as
transfer pricing agreements, among Vistaprint N.V. and its subsidiaries. These agreements establish transfer prices
for production, marketing, management, technology development and other services performed by these
subsidiaries for other group companies. Transfer prices are prices that one company in a group of related
companies charges to another member of the group for goods, services or the use of property. If two or more
affiliated companies are located in different countries, the tax laws or regulations of each country generally will
require that transfer prices be consistent with those between unrelated companies dealing at arm's length. With the
exception of the transfer pricing arrangements applicable to our Dutch, French and Australian operations, our
transfer pricing arrangements are not binding on applicable tax authorities, and no official authority in any other
country has made a determination as to whether or not we are operating in compliance with its transfer pricing laws.
If tax authorities in any country were successful in challenging our transfer prices as not reflecting arm's length
transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these
revised transfer prices. A reallocation of taxable income from a lower tax jurisdiction to a higher tax jurisdiction
would result in a higher tax liability to us. In addition, if the country from which the income is reallocated does not
agree with the reallocation, both countries could tax the same income, resulting in double taxation.
Our Articles of Association, Dutch law and the independent foundation, Stichting Continuïteit Vistaprint,
may make it difficult to replace or remove management, may inhibit or delay a change of control or may
dilute your voting power.
Our Articles of Association, or Articles, as governed by Dutch law, limit our shareholders' ability to suspend
or dismiss the members of our management board and supervisory board or to overrule our supervisory board's
nominees to our management board and supervisory board by requiring a vote of two thirds of the votes cast
representing more than 50% of the outstanding ordinary shares to do so under most circumstances. As a result,
there may be circumstances in which shareholders may not be able to remove members of our management board
or supervisory board even if holders of a majority of our ordinary shares favor doing so.