A Danish company transferred intangible assets to a newly established group entity and used DCF models applying a 20% return rate for the business and 8% for routine functions. The Danish Tax Agency challenged the valuation, relying instead on a contemporaneous share acquisition price. The National Tax Tribunal ruled mostly in favour of the tax authority in 2025, finding that the differing return assumptions produced an arm's length pricing distortion ... Read more

A Danish company transferred intangible assets to a newly established group entity and used DCF models applying a 20% return rate for the business and 8% for routine functions. The Danish Tax Agency challenged the valuation, relying instead on a contemporaneous share acquisition price. The National Tax Tribunal ruled mostly in favour of the tax authority in 2025, finding that the differing return assumptions produced an arm's length pricing distortion ... Read more

Hexadite Ltd, an Israeli cybersecurity company, sold its intellectual property to Microsoft group entities for $65.4 million following a share acquisition. Israel's tax authority revalued the transferred IP at $95.9 million by adding back deferred shareholder payments and tax effects, then imposed imputed interest on the difference. The District Court ruled mostly in favour of the tax authority, upholding the higher valuation and the secondary adjustment in the form of deemed interest ... Read more

A Dutch tobacco subsidiary faced transfer pricing corrections across tax years 2008 to 2016, with disputes over factoring costs, guarantee fees on listed bonds, and a licence termination. The Amsterdam Court of Appeal found factoring costs largely non-arm's length, accepted that Tobacco BV's derived credit rating matched the group's, and upheld most assessments and penalties, deciding predominantly in favour of the tax authority ... Read more

A Danish company transferred intangible assets, including rights to multiple products, to an affiliated foreign company. The tax authority challenged the valuation assumptions used in the DCF model. Denmark's Tax Tribunal agreed with the DCF approach but corrected revenue growth projections to align with the company's own pre-transfer budgets and required the full tax amortisation benefit to be included, also ruling that product Y rights fell within the transfer scope ... Read more

To the extent that a controlled participant’s tax rate is not materially affected by whether it enters into the cost sharing or licensing alternative (or reliable adjustments may be made for varying tax rates), the factor (that is, one minus the tax rate) may be cancelled from both sides of the equation of the cost sharing and licensing alternative present values. Accordingly, in such circumstance it is sufficient to apply post-tax discount rates to projections of pre-tax income for the purpose of equating the cost sharing and licensing alternatives. The specific applications of the income method described in paragraphs (g)(4)(ii) through (iv) of this section and the examples set forth in paragraph (g)(4)(viii) of this section assume that a controlled participant’s tax rate is not materially affected by whether it enters into the cost sharing or licensing alternative ... Read more

In certain circumstances, post-tax income may be derived as the product of the result of applying a post-tax discount rate to pre-tax income, and a factor equal to one minus the tax rate (as defined in (j)(1)(i)). See paragraph (g)(2)(v)(B) of this section ... Read more

In principle, the present values of the cost sharing and licensing alternatives should be determined by applying post-tax discount rates to post-tax income (including the post-tax value to the controlled participant of the PCT Payments). If such approach is adopted, then the post-tax value of the PCT Payments must be appropriately adjusted in order to determine the arm’s length amount of the PCT Payments on a pre-tax basis. See paragraph (g)(2)(x) of this section ... Read more

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A Swedish pharmaceutical company transferred the Restylane trademark to a Swiss related party and operated limited risk distribution in China. The Swedish Tax Agency challenged the valuation of the trademark transfer in 2011 and the arm's length remuneration for distribution in 2013–2014. The Administrative Court of Appeal upheld the tax authority's adjustments, finding independent parties would have used more recent sales figures, resulting in a significantly higher arm's length trademark value ... Read more

Where the purpose of the valuation technique is to isolate the projected cash flows associated with an intangible, it may be necessary to evaluate and quantify the effect of projected future income taxes on the projected cash flows. Tax effects to be considered include: (i) taxes projected to be imposed on future cash flows, (ii) tax amortisation benefits projected to be available to the transferee, if any, and (iii) taxes projected to be imposed on the transferor as a result of the transfer, if any ... Read more

Valuation techniques that estimate the discounted value of projected future cash flows derived from the exploitation of the transferred intangible or intangibles can be particularly useful when properly applied. There are many variations of these valuation techniques. In general terms, such techniques measure the value of an intangible by the estimated value of future cash flows it may generate over its expected remaining lifetime. The value can be calculated by discounting the expected future cash flows to present value. Under this approach valuation requires, among other things, defining realistic and reliable financial projections, growth rates, discount rates, the useful life of intangibles, and the tax effects of the transaction. Moreover it entails consideration of terminal values when appropriate. Depending on the facts and circumstances of the individual case, the calculation of the discounted value of projected cash flows derived from the exploitation of the intangible should be evaluated from the perspectives of both parties to the transaction in arriving at ... Read more

A Swedish company sold the 'L' trademark to its Dutch affiliate in 2012, arguing it held only a minor economic interest and that buyer tax effects should be excluded from pricing. The Swedish Tax Agency challenged both positions. The Gothenburg Court of Appeal ruled in 2020 that the seller was the full legal and economic owner and that arm's length pricing must reflect tax effects for both parties, upholding the agency's adjustment ... Read more

The Study on the Application of Economic Valuation Techniques for Determining Transfer Prices of Cross Border Transactions between Members of Multinational Enterprise Groups in the EU provides an overview on how valuation techniques can practically and most efficiently be used for transfer pricing purposes in the EU, particularly for transactions involving intangibles. It investigates the differences between valuations for transfer pricing purposes and valuations for other purposes, and the state of play in terms of experience gathered by EU Member States and trade partners ... Read more

A Swedish company sold trademarks for SEK 103 million, but the Swedish Tax Agency argued an arm's length price was SEK 134 million, incorporating tax effects into the valuation. The company contested the inclusion of tax benefits and challenged use of the Gordon growth model. The Administrative Court of Appeal, ruling in 2015, sided with the tax authority, confirming that tax implications for both buyer and seller are relevant when valuing intangible assets ... Read more