Transfer Pricing in Light of BEPS: With Emphasis on Intangibles

Alex Buckley Johansen & Talha Wahab

Student thesis: Master thesis


In 2015 OECD and the G20 countries released the Base Erosion and Profit Shifting (BEPS) project with the aim of equipping governments with international tax rules to address tax avoidance issue. A part of the BEPS report contains new guidance regarding transfer pricing and especially intagibles, which is the primary focus of this thesis. The aim of this thesis is to analyze and interpret which changes the new guidelines will have on international taxation regarding identifying intangibles and the ownership of intangibles. Furthermore, to examine, from an economic perspective, the development of the transfer pricing issue on an international level, and to derive the impact on the Danish tax system.
The thesis concludes that in the aspect of identifying intangibles, BEPS has adopted a broader and clearer definition of intangibles than the previous one in OECD’s Transfer Pricing Guidelines, with the goal to prevent third parties adopting different interpretations. The definition on certain types of intangibles still seems unclear, and as the implementation process is still in progress and only time will tell how tax authorities will interpret, when implementing and applying it in domestic law. When it comes to the ownership of intangibles, the new transfer pricing guidelines primarily state the legal ownership as a starting point. The starting point will then be able to be modified into an economic ownership based on some new guidelines, if the “actual code of conduct” differs from the contractual terms. However, the thesis raises some doubts whether the new guidelines will have a successful impact on the tax related issues or not. Furthermore, the thesis also shows that the international tax competition on corporate tax rate may have unintended consequences for the international tax system. However, it has limited consequences for the Danish tax revenues, as corporate tax represents a very small amount of total tax revenues in Denmark. The Danish tax authorities tries to ensure that multinational enterprises don’t avoid paying their taxes by checking their transfer pricing documentation. The focus on transfer pricing is one of the Danish tax authorities’ control activities, since it is a considerable amount in the total national tax gap, which is why the Danish politicians are starting to acknowledge, that multinational enterprises could be using transfer pricing as a tool for avoid taxation. Finally, the thesis finds the ideal solution to be a total harmonization of the corporate tax rates, but as most states seems unwilling to give up their sovereignty, it is highly unlikely to become a reality in the near future.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
Publication date2017
Number of pages125