Transfer Pricing: Teoretiske og praktiske udfordringer ved koncerninterne salg af immatrielle aktiver

Simone Luna Skovgaard & Jens Christian Andersen

Student thesis: Master thesis


This thesis analyses theoretical and practical challenges that affect multinational enterprises conducting cross-border intercompany transfer of intangibles assets. The analysis focuses on Danish parent companies, which take part in controlled transactions of intangible assets with cross-border subsidiaries. Danish transfer pricing regulations are to be interpreted in accordance with the OECD Transfer Pricing Guidelines. The arm’s length principle in these guidelines states that transactions between associated enterprises should correspond to prices and conditions between independent enterprises, using the five comparability factors. The OECD pricing methods are to be used for continuous transactions between associated enterprises. The TNMM method is deemed suitable for a parent-subsidiary structure. Furthermore, SKAT has listed valuation methods, which are used for single transactions between associated enterprises. Here, the DCF method is found to be the most useful method for valuating transfers of intangible assets. Should transactions between associated enterprises not comply with the arm’s length principle, SKAT will correct the transactional income, and should the company not fulfill the documentation or 60 days deadline, SKAT can impose fees as well. Thus, Danish companies should comply with the Danish tax law as well as SKAT’s legal guidelines to avoid fees and administrative costs. Intangible assets are defined in Danish law as goodwill and other intangible assets. Companies can recognize income related to the intangibles assets as well as depreciation rights through the beneficial ownership of these assets. Hence, the thesis evaluates how intangible assets are transferred between companies to optimize taxation through income relocation. The OECD Transfer Pricing Guidelines have undergone extensive development due to the international economic environment’s need for detailed guidelines to prevent base erosion and profit shifting (BEPS). Thus, the thesis analyses the ongoing changes of the Transfer Pricing Guidelines (action 8, 9 and 10), in order to understand the development in transfer pricing regulations. These developments are analysed through an advisor’s perspective, in which it is found that these guidelines are subject to limitations due to lack of practical examples. Furthermore, the thesis discusses the practical challenges of a business restructuring which involves intercompany transfer of intangible assets through a self-developed business case. This analysis illustrates the practical challenges when companies transfer the beneficial ownership of valuable intangible assets, where both important functions and risks must be transferred as well. The thesis discusses how these transactions should be compensated in order to accommodate relevant tax law and meet the demands of the companies involved. The business case shows how the transactional flow changes within the group as a secondary effect of the change of the parent company. The paper concludes that many challenges exist with intercompany transfers of intangible assets from Danish companies, since both national and international regulations should be considered, however the development in these regulations and guidelines are expected to streamline the process and minimize the administrative costs.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2015
Number of pages146