The setting of transfer prices for intellectual property (IP) is inherently difficult for a variety of reasons not least of which is that IP is by definition unique and so there are limited if any reliable benchmarks.
The OECD Guidelines and many tax authorities prefer or imply that they prefer the use of comparable transactions to determine transfer prices for IP. However by definition IP is unique and therefore truly comparable transactions are unlikely to exist. The recent update to the OECD Guidelines tempers this preference but there remains an implication that where arrangements between independent parties are reliably comparable then the pricing of such arrangements should be used first and foremost for setting transfer prices.
A range of research concludes that negotiations between independent parties focus on the profit attributable to the IP and then split...
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The setting of transfer prices for intellectual property (IP) is inherently difficult for a variety of reasons not least of which is that IP is by definition unique and so there are limited if any reliable benchmarks.
The OECD Guidelines and many tax authorities prefer or imply that they prefer the use of comparable transactions to determine transfer prices for IP. However by definition IP is unique and therefore truly comparable transactions are unlikely to exist. The recent update to the OECD Guidelines tempers this preference but there remains an implication that where arrangements between independent parties are reliably comparable then the pricing of such arrangements should be used first and foremost for setting transfer prices.
A range of research concludes that negotiations between independent parties focus on the profit attributable to the IP and then split...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
