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Category: Intangibles – Goodwill Know-how Patents

In transfer pricing the word “intangible” is intended to address something which is not a physical asset or financial asset, which is capable of being owned or controlled for use in commercial activities, and whose use or transfer would be compensated had it occurred in a transaction between independent parties in comparable circumstances.

In discussions of transfer pricing various categories of intangibles are described and labels applied. Distinctions are sometimes made between trade intangibles and marketing intangibles, between “soft” intangibles and “hard” intangibles, between routine and non-routine intangibles, and between other classes and categories of intangibles.

Examples of intangibles are: Patents, Know-how and trade secrets, trademarks, trade names and brands, rights under contracts and government licences, licences and similar limited rights in intangibles, goodwill and ongoing concern value.

Denmark vs H Group, April 2019, Tax Tribunal, Case No. SKM2019.207

The case concerns the valuation of intangible assets transferred from a Danish subsidiary to the US parent company. In the case, it was agreed that certain intangible assets had been transferred in connection with a written agreement that the Danish company would pay royalties for the use of the Group’s trademarks, know-how and patents. The Danish tax authorities (SKAT) had increased the company’s taxable income on the grounds that the majority of the Danish company’s […]

Norway vs Normet Norway AS, March 2019, Borgarting Lagmannsrett, Case No 2017-202539

The dispute in this case was the price paid in 2013 for an intra-group transfer of intangibles. In January 2013 the Swiss company Normet International Ltd acquired all the shares in the Norwegian company Dynamic Rock Support AS (now Normet Norway AS) for a price of NOK 78 million. In February 2013 all intangibles in Dynamic Rock Support AS was transfered to Normet International Ltd for a total sum of NOK 3.666.140. The Norwegian tax […]

Norway vs Cytec, March 2019, Borgarting Lagmannsrett, Case No 2017-90184

The question in the case was whether Cytec Norway KS (now Allnex Norway A/S) had paid an arm’s length price for an intra-group transfer of intangible assets in 2010. Cytec Norway KS had set the price for the accquired intangibles at NOK 210 million and calculated tax depreciations on that basis. The Norwegian tax authorities found that no intangibles had actually been transferred. The tax Appeals Committee determined that intangibles had been transferred but only […]

Blizzard Gaming involved in major Tranfer Pricing disputes

US Gaming Giant, Activision Blizzard Inc. – known for games such as World of Warcraft and Diablo – is and has been involved in several major transfer pricing disputes – with the US, French, UK, and Swedish tax authorities. In a 10Q filing with the US Securities and Exchange Commission from November 2018 the following information was provided by the company on pending tax cases. “Activision Blizzard’s 2009 through 2016 tax years remain open to […]

Switzerland vs S SA, Dec 2018, Swiss Federal Supreme Court, Case No 2C_11/2018

The Swiss company S SA is involved in the manufacturing and distribution of pharmaceutical and chemical products. S SA is part of multinational group with a parent company in the Netherlands, N BV, and subject to a royalty payments equal to 2.5% of its turnover for using the results of R&D activities conducted by a French sister company F SAS. The R&D activities were performed by F SAS and remunerated with a cost (plus 15%). […]

Tokyo District Court, judgment of November 24 2017

In this case a Japanese company had entered into a series of controlled transactions with foreing group companies granting services and licences to use intangibles – know-how related to manufacturing and sales, training, and provided support by sending over technical experts. The company had used a CUP method to price these transactions based on select “internal comparables”. Tax authorities disagreed with the company and found that the residual profit split method should be applied to […]

Israel vs. Gteko Ltd (Microsoft), June 2017, District Court

In November 2006 Microsoft Corp. purchased 100% of the shares of Gteko Ltd. (IT Support technology), for USD 90 million. The purchase was made with the intention of integrating Gteko’s technology into Microsoft’s own products. Following this purchase of Gteko Ltd., the employees were transferred to the local Microsoft subsidiary and a few months later another agreement was entered transferring Gteko’s intellectual property/intangibles to Microsoft. This transfer was priced at USD 26 million based on the purchase price allocation (PPA). The […]

US vs. Amazon, March 2017, US Tax Court, Case No. 148 T.C. No 8

Amazon is an online retailer that sells products through Amazon.com and related websites. Amazon also sells third-party products for which it receives a commissions. In a series of transactions  in 2005 and 2006, Amazon US transferred intangibles to Amazon Europe, a newly established European HQ placed in Luxembourg. A Cost Sharing Arrangement (“CSA”), whereby Amazon US and Amazon Europe agreed to share costs of further research, development, and marketing in proportion to the benefits A […]

Denmark vs. Corp, March 2017, Tax Tribunal, SKM2017.187

In this case the Danish Tax administration had made an estimated assessment due to a insufficient TP documentation. In the assessment goodwill amortizations were included when comparing the operating income of the company to that of independent parties in a database survey. The Tax Tribunal found that the tax administration was not entitled to make an estimated assessment under Article 3B (3) of the current Tax Control Act. 8 (now paragraph 9) and section 5 3, where […]

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