TPG2022 Chapter VI paragraph 6.145

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Category: OECD Transfer Pricing Guidelines (2022), TPG2022 Chapter VI: Special Considerations for Intangibles | Tag: , , , , , , , ,
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The transfer pricing methods most likely to prove useful in matters involving transfers of one or more intangibles are the CUP method and the transactional profit split method. Valuation techniques can be useful tools. Supplemental guidance on the transfer pricing methods most likely to be useful in connection with transfers of intangibles is provided below.

Related Guidelines

TPG2022 Chapter II Annex II example 14 74. Below are some illustrations of the effect of choosing a measure of profits to determine the relevant profits to be split when applying a transactional profit split Scenario 1 74. Assume A and B are two associated enterprises situated in two different tax jurisdictions. Both manufacture the same widgets...
TPG2022 Chapter VI paragraph 6.109 Section D. 1 provides general supplemental guidance related to all transactions involving intangibles. Section D.2 provides supplemental guidance specifically related to transactions involving the transfer of intangibles or rights in intangibles. Section D.3 provides supplemental guidance regarding transfers of intangibles or rights in intangibles whose value is highly uncertain at...
TPG2022 Chapter VI paragraph 6.156 It is not the intention of these Guidelines to set out a comprehensive summary of the valuation techniques utilised by valuation professionals. Similarly, it is not the intention of these Guidelines to endorse or reject one or more sets of valuation standards utilised by valuation or accounting professionals or to...
TPG2022 Chapter VI paragraph 6.154 Where valuation techniques are utilised in a transfer pricing analysis involving the transfer of intangibles or rights in intangibles, it is necessary to apply such techniques in a manner that is consistent with the arm’s length principle and the principles of these Guidelines. In particular, due regard should be given...
TPG2022 Chapter VI paragraph 6.153 In situations where reliable comparable uncontrolled transactions for a transfer of one or more intangibles cannot be identified, it may also be possible to use valuation techniques to estimate the arm’s length price for intangibles transferred between associated enterprises. In particular, the application of income based valuation techniques, especially valuation...
TPG2022 Chapter II paragraph 2.175 For instance, where an asset-based profit splitting factor is used, it may be based on data extracted from the balance sheets of the parties to the transaction. It will often be the case that not all the assets of the taxpayers relate to the transaction at hand and that accordingly...
TPG2022 Chapter VI paragraph 6.148 In some circumstances, a transactional profit split method can be utilised to determine the arm’s length conditions for a transfer of intangibles or rights in intangibles where it is not possible to identify reliable comparable uncontrolled transactions for such transfers. Section C of Chapter II contains guidance to be considered...
TPG2022 Chapter VI paragraph 6.158 When applying valuation techniques, including valuation techniques based on projected cash flows, it is important to recognise that the estimates of value based on such techniques can be volatile. Small changes in one or another of the assumptions underlying the valuation model or in one or more of the valuation...
EU Study on the Application of Economic Valuation Techniques (2016) Application of Economic Valuation Techniques for Determining Transfer Prices of Cross Border Transactions....
THE APPLICATION OF THE PROFIT SPLIT METHOD WITHIN THE EU (2019) This paper addresses the first stage and aims at clarifying certain concepts in applying the PSM: (i) when to use the PSM (i.e. in which circumstances it may be considered the most appropriate transfer pricing method) and (ii) how to split the profit based on the concepts described in the...