The EdgarStat Blog explores issues in transfer pricing and application of the transactional net margin method (TNMM or CPM in the US) and other enterprise profit-based methods.
A 2008 restructuring transferred the European rights to the McDonald’s intangibles to McD Europe Franchising Sàrl, a Luxembourg-resident subsidiary with branches in both Switzerland and the U.S. While this migration of intangible assets created substantial controversy in Europe, the real transfer pricing concern would be an IRS issue and not an issue for the French Tax Authority (FTA) if the royalty rate remained at 5%.
Topics: Europe Best Method TNMM/CPM Tax Controversy Royalty Rates Intangibles
Read moreLicensees bear significant commercial risk when they use valuable intangible assets owned by another entity. As such, any method that affords them with an expected return to its tangible assets that is only as high as the overall enterprise’s cost of capital is inconsistent with sound economics.
Topics: US Transfer Pricing Medtronic Section 482 TNMM/CPM Tax Controversy Royalty Rates Intangibles
Read moreUse of the CPM/TNMM to determine royalty rates for valuable intangibles in transfer pricing is incompatible with basic financial economics.
Topics: DEMPE OECD Guidelines US Internal Revenue Service Tax Policy TNMM/CPM Royalty Rates Intangibles
Read more