Ireland issued tax rulings in 1991 and 2007 allowing Apple subsidiaries to exclude IP licence profits from their Irish tax base. The European Commission found this constituted illegal state aid and ordered recovery. After the General Court annulled that decision in 2020, the Court of Justice reversed course in 2024, finding the Commission had sufficiently proved Apple received an unlawful tax advantage worth billions ... Read more

In 2013, Airbnb entered into a technology and licensing agreement with its Irish subsidiary, which included a cost-sharing arrangement for the use and development of its proprietary intellectual property. As part of this arrangement, the Irish affiliate made a lump-sum platform contribution transaction (PCT) payment of $35 million in exchange for rights to Airbnb’s IP. To determine the PCT amount, Airbnb applied the income method, using discount rates ranging from 25% to 35% and estimating the useful lives of the licensed intangibles. The U.S. Internal Revenue Service (IRS) challenged this valuation, asserting that an arm’s length payment should have been approximately $4.2 billion. Based on this position, the IRS issued an assessment for additional taxable income and associated penalties. The IRS employed a comparable uncontrolled transaction (CUT) method, referencing Airbnb’s Series D financing round, which took place on April 16, 2014—roughly three months after the PCT was executed. Airbnb disputed the IRS assessment and filed a petition with the United ... Read more

Ireland issued tax rulings in 1991 and 2007 allowing Apple subsidiaries to exclude IP licensing profits from their Irish tax base. The European Commission found this constituted illegal State aid and ordered recovery. After the General Court annulled that decision in 2020, the Advocate General opined in 2023 that the General Court erred in law and proposed referring the case back for a new ruling on the merits ... Read more

Another example of intra-group services is the administration of licences. The administration and enforcement of intangible property rights should be distinguished from the exploitation of those rights for this purpose. The protection of a licence might be handled by a group service centre responsible for monitoring possible licence infringements and for enforcing licence rights ... Read more

The European Commission had ruled in 2016 that Ireland's tax rulings for Apple Sales International and Apple Operations Europe constituted illegal State aid, allowing Apple to pay far less tax than other businesses. Ireland and Apple challenged the decision. The EU General Court annulled the Commission's ruling in 2020, finding the Commission failed to demonstrate to the required legal standard that a selective economic advantage had been granted ... Read more

A Danish subsidiary transferred its self-developed intangibles to a US parent, after which it paid royalties for their use. The Danish tax authorities assessed the transfer using the acquisition share price as a valuation basis. The Tax Tribunal upheld the authority's right to assess, finding the transaction absent from transfer pricing documentation, but rejected the share-price valuation as too uncertain and applied the relief-from-royalty method instead ... Read more

A Japanese manufacturer of plating chemicals priced know-how licences and technical support services to foreign group companies using a CUP method based on internal comparables. The Japanese tax authority rejected the CUP approach and applied the residual profit split method for fiscal years 2000–2004. The Tokyo District Court dismissed the company's appeal in 2017, finding material differences between the controlled and comparable transactions and confirming the tax authority's assessment ... Read more

Another example of intra-group services is the administration of licences. The administration and enforcement of intangible property rights should be distinguished from the exploitation of those rights for this purpose. The protection of a licence might be handled by a group service centre responsible for monitoring possible licence infringements and for enforcing licence rights ... Read more

In 1970, a U.S. court determined compensation for patent infringement by establishing 15 factors to assess a reasonable royalty rate. The Georgia-Pacific factors considered established royalty rates, licence scope, commercial relationships, profitability, and market conditions. Though not a transfer pricing case, this decision became a cornerstone reference in international intangible valuation and licensing practice, influencing how arm's length royalty rates are determined globally ... Read more