Transfer pricing disputes concerning intangibles — including trademarks, patents, know-how, and goodwill — arise where related parties transfer, license, or otherwise exploit intellectual property across borders at prices that tax authorities contend do not reflect arm’s length conditions. The legal foundation is the arm’s length standard under Article 9 of the OECD Model Tax Convention and its domestic equivalents, such as Article 57 of the French General Tax Code or analogous Polish and Italian provisions. The core question is whether the consideration paid or received for an intangible — whether as a one-time transfer price or ongoing royalty — equals what independent parties would have agreed under comparable circumstances.

In practice, disputes cluster around two related fact patterns. First, tax authorities challenge the outright transfer of intangibles to related parties at undervalue, as in SA SACLA, where a trademark portfolio was transferred to a Luxembourg subsidiary for €90,000, and in the Polish E S.A. case, where a trademark was transferred and then repurchased within three years while the taxpayer simultaneously claimed licence fee deductions and depreciation. Second, authorities challenge the deductibility of ongoing royalty payments where the payer derives no independent commercial benefit from the arrangement or where the royalty is embedded within the purchase price of goods, as seen in the Polish Cosmetics and P.B. disputes. The Dolce & Gabbana litigation illustrates a further complexity: whether a sub-licensing structure between a trademark licensee and its manufacturing subsidiary correctly allocates value for both production rights and promotional activities.

The principal regulatory framework is Chapter VI of the OECD Transfer Pricing Guidelines (2022), covering paragraphs 6.1 through 6.228, which address the identification of intangibles, the legal versus economic ownership distinction, and the allocation of returns to entities that perform DEMPE functions (Development, Enhancement, Maintenance, Protection, and Exploitation). Chapters I and II are also relevant for method selection. OECD guidance emphasises that legal ownership alone does not determine entitlement to intangible returns; the entity bearing risk and contributing economically to value creation governs the allocation.

Courts and practitioners examine whether the transfer or licence was commercially rational, whether comparable uncontrolled transactions exist to benchmark the price, and whether the taxpayer documented its pricing contemporaneously. The Otis Servizi case illustrates that the burden of proof and the adequacy of the tax authority’s comparability analysis are independently decisive. Disallowance of royalty deductions requires authorities to demonstrate both mispricing and an absence of genuine commercial substance, as the Polish Supreme Administrative Court confirmed in the P.B. and S. spółka z o.o. decisions.

Intangibles cases are among the most consequential in transfer pricing litigation because they routinely involve large adjustments, cross-border profit shifting allegations, and methodological choices where minor assumptions dramatically affect outcomes.