Vistaprint 2014 Annual Report Download - page 28

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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 the tax authorities in these countries could claim 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 14 “Income Taxes” in the accompanying notes to the 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 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 certain jurisdictions where we have obtained rulings or advance pricing agreements, 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, an independent foundation, Stichting Continuïteit Vistaprint, or the Foundation, exists 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