This litigation raised an oft-seen issue as to the correct definition of “sales” for transfer pricing approaches that rely on the Comparable Uncontrolled Transaction (Price) method.

Topics: Royalty Rates Intangibles Comparable Uncontrolled Transaction (Price) Method Portugal Royalty Base

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: Royalty Rates Intangibles Europe Best Method TNMM/CPM Tax Controversy

Licensees 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 Royalty Rates Intangibles Medtronic Section 482 TNMM/CPM Tax Controversy

Use of the CPM/TNMM to determine royalty rates for valuable intangibles in transfer pricing is incompatible with basic financial economics.

Topics: DEMPE Royalty Rates OECD Guidelines US Internal Revenue Service Intangibles Tax Policy TNMM/CPM