Franco-Nevada reaches settlement on Canadian tax disputes

Franco-Nevada (FNV) has reached a settlement with the Canada Revenue Agency, or CRA, which provides for a final resolution of Franco-Nevada’s tax dispute in connection with the reassessments under transfer pricing rules of the 2013 to 2019 taxation years related to income generated by two of the company’s wholly-owned foreign subsidiaries, Franco-Nevada Barbados and Franco-Nevada Mexico outside of Canada. The settlement will not require the payment of any tax in Canada on the foreign earnings of Franco-Nevada Barbados and Franco-Nevada Mexico for the 2013 to 2019 taxation years. The service fee charged by Franco-Nevada for certain services provided to Franco-Nevada Barbados and Franco-Nevada Mexico will be adjusted to increase the mark-up applied to Franco-Nevada’s cost of providing those services from the current range of 7-20% to 30%. This additional service fee will result in Franco-Nevada being subjected to Canadian tax on additional income of C$1.4M in Canada for the 2013 to 2019 taxation years. After the application of non-capital losses, Franco-Nevada does not anticipate any additional cash taxes will arise in respect of these years as a result of the settlement. The settlement is not legally binding on the CRA for years after 2019.