Transfer Pricing og immaterielle aktiver

Thomas Mølgaard

Student thesis: Master thesis


Transfer pricing has gained attention in the past years as tax authorities have focused their efforts on dependent transactions within multinational corporations. These transactions have to be at “arms length” which means that trade between parties with related interests must be met at the same terms as trade between unrelated parties and has to be at market prices. This thesis will focus on the Danish and European transfer pricing legislation and focus on intangible assets, as they are different regarding transactions than other physical assets, as the valuation process is different and difficult due to the nature of these assets. A comparable transaction is mostly difficult to find, why valuation according to the methods described in the OECD Transfer Pricing Guidelines are not satisfactory. As these assets cause great problems regarding the valuation, the Danish tax authorities has issued a guideline the 21th of August 2009 called “Værdiansættelsesvejledningen” to suggest other transfer pricing methods that will better suit a correct valuation according to the arms length principle. This guideline suggests among other methods the income-based methods which is also suggested though not described in the OECD Guidelines chapter VI regarding intangible assets. While OECD only suggests the topic, the Danish valuation guideline suggests and explains multiple methods, which are all based on a net present value approach. These methods are not strictly arms length methods though. The OECD Guidelines suggest that the traditional methods are better than the profit-based, which might be more suitable for intangible assets. The OECD has furthermore removed the status of the profit-based methods as a last resort concluding that the best method should be used. The Danish valuation guidelines suggests that the income-based methods are even better, but they increase the documentation requirements for the transactions as well. These guidelines can be seen as an advantage to the tax payers, as they now have a guideline regarding intangible assets, that was not present to them before under the OECD Guidelines. It will be difficult for the tax authorities to prove the companies wrong in the documentation, because the valuation of the intangible assets has to do with future financial flows. There is an information asymmetry between the taxpayer and the tax authorities, which might cause problems in the valuation process. The income-based methods have some clear advantages though and must be looked upon as reasonable. The OECD is currently rethinking the OECD Guidelines regarding the intangible assets. If they accept the income-based methods, it can be seen as an advantage, as it is currently a topic for the local tax authorities to solve. Income-based methods are supposed to provide results according to arms length prices. One view is therefore that the future development should be that the income-based methods are to be internationally accepted to minimize the different legislation across the OECD member states. The OECD has set up a working party to consider the possible implementation of the income-based methods. One of the fears is that this method, though more suitable for intangible assets due to their non-physical presence, will not provide prices strictly in accordance with the arms length principle. The thesis will provide a perspective on this, as the American legislation will be compared to the OECD Guidelines with the IRC section 482 paragraph. This will show numerous similarities but also great differences between the two set of legislation rules.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2011
Number of pages88