Vistaprint 2013 Annual Report Download - page 28

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currently subject refer to Note 13 “Income Taxes” in the accompanying notes to the consolidated financial
statements included in Item 1 of Part I 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 arrangements may be challenged, which could result 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 supermajority vote 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.
In addition, we have established an independent foundation, Stichting Continuïteit Vistaprint, or the
Foundation, to safeguard the interests of Vistaprint N.V. and its stakeholders, which include but are not limited to
our shareholders, and to assist in maintaining Vistaprint's continuity and independence. To this end, we have
granted the Foundation a call option pursuant to which the Foundation may acquire a number of preferred shares
equal to the same number of ordinary shares then outstanding, which is designed to provide a protective measure
against unsolicited take-over bids for Vistaprint and other hostile threats. If the Foundation were to exercise the call
option, it may prevent a change of control or delay or prevent a takeover attempt, including a takeover attempt that
might result in a premium over the market price for our ordinary shares. Exercise of the preferred share option
would also effectively dilute the voting power of our outstanding ordinary shares by one half.
We have limited flexibility with respect to certain aspects of capital management.
Dutch law requires shareholder approval for the issuance of shares and grants preemptive rights to existing
shareholders to subscribe for new issuances of shares. In November 2011, our shareholders granted our
supervisory board and management board the authority to issue ordinary shares as the boards determine
appropriate, without obtaining specific shareholder approval for each issuance, and to limit or exclude shareholders'
preemptive rights. However, this authorization expires in November 2016. Although we plan to seek re-approval
Form 10-K