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Database of Transfer Pricing Case Laws

TPG2022 Chapter VI paragraph 6.41

Posted on January 20, 2022 | By OECD

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In identifying the legal owner of intangibles, an intangible and any licence relating to that intangible are considered to be different intangibles for transfer pricing purposes, each having a different owner. See paragraph 6.26. For example, Company A, the legal owner of a trademark, may provide an exclusive licence to Company B to manufacture, market, and sell goods using the trademark. One intangible, the trademark, is legally owned by Company A. Another intangible, the licence to use the trademark in connection with manufacturing, marketing and distribution of trademarked products, is legally owned by Company B. Depending on the facts and circumstances, marketing activities undertaken by Company B pursuant to its licence may potentially affect the value of the underlying intangible legally owned by Company A, the value of Company B’s licence, or both.

Related Guidelines

TPG2022 Chapter VI paragraph 6.40The legal owner will be considered to be the owner of the intangible for transfer pricing purposes. If no legal owner of the intangible is identified under applicable law or governing contracts, then the member of the MNE group that, based on the facts and circumstances, controls decisions concerning the...

TPG2022 Chapter VI paragraph 6.66The identity of the member or members of the group assuming risks related to the development, enhancement, maintenance, protection, and exploitation of intangibles is an important consideration in determining prices for controlled transactions. The assumption of risk will determine which entity or entities will be responsible for the consequences if...

TPG2022 Chapter VI paragraph 6.72The entitlement of any member of the MNE group to profit or loss relating to differences between actual (ex post) and a proper estimation of anticipated (ex ante) profitability will depend on which entity or entities in the MNE group in fact assumes the risks as identified when delineating the...

TPG2022 Chapter VI paragraph 6.68It is especially important to ensure that the group member(s) asserting entitlement to returns from assuming risk actually bear responsibility for the actions that need to be taken and the costs that may be incurred if the relevant risk materialises. If costs are borne or actions are undertaken by an...

TPG2022 Chapter VI paragraph 6.67In determining which member or members of the group assume risks related to intangibles, the principles of Section D. 1.2 of Chapter I apply. In particular, steps 1 to 5 of the process to analyse risk in a controlled transaction as laid out in paragraph 1.60 should be followed in...

TPG2022 Chapter VI paragraph 6.65Particular types of risk that may have importance in a functional analysis relating to transactions involving intangibles include (i) risks related to development of intangibles, including the risk that costly research and development or marketing activities will prove to be unsuccessful, and taking into account the timing of the investment...

TPG2022 Chapter VI paragraph 6.64When funding is provided to a party for the development of an intangible, the relevant decisions relating to taking on, laying off or declining a risk bearing opportunity and the decisions on whether and how to respond to the risks associated with the opportunity, are the decisions related to the...

TPG2022 Chapter VI paragraph 6.63The extent and form of the activities that will be necessary to exercise control over the financial risk attached to the provision of funding will depend on the riskiness of the investment for the funder, taking into account the amount of money at stake and the investment for which these...

TPG2022 Chapter VI paragraph 6.62The contractual arrangements will generally determine the terms of the funding transaction, as clarified or supplemented by the economic characteristics of the transaction as reflected in the conduct of the parties. The return that would generally be expected by the funder should equal an appropriate risk-adjusted return. Such return can...

TPG2022 Chapter VI paragraph 6.61Under the principles of Section D. 1.2 of Chapter I, the first step in a transfer pricing analysis in relation to risks is to identify the economically significant risks with specificity. When identifying risks in relation to an investment with specificity, it is important to distinguish between the financial risks...

Supplemental Guidance

Belgium vs “Uniclick B.V.”, June 2021, Court of Appeal, Case No 2016/AR/455A Belgian entity performed all key DEMPE functions for the Uniclic technology without remuneration, while royalty income flowed to a related Irish-registered entity. The tax authority sought to add foregone royalties to the taxpayer's taxable base, alleging a simulated transfer of invention rights. The Court of Appeal ruled mostly in...

Sweden vs Meda AB, April 2024, Administrative Court of Appeal, Case No 6754-6759-22Meda AB, a Swedish pharmaceutical parent, established a Luxembourg subsidiary as contractual owner of acquired intangibles, retaining only routine compensation for group services. Swedish tax authorities reallocated profits based on actual risk control, but the Administrative Court of Appeal sided with Meda AB, finding that delineation based on risk control...

Sweden vs Datawatch AB, March 2020, Administrative Court of Appeal, Case No 4775-4777-19A Swedish subsidiary was found to have transferred sales activities, intangible assets, and product technology rights to its US parent company without receiving arm's length compensation during a business restructuring in 2013–2015. The Swedish Administrative Court of Appeal upheld the tax authority's position, confirming that the actual conduct between the...

Switzerland vs Swiss Investment AG, February 2020, Administrative Court Zurich, Case No SB.2018.00094 and SB.2018.00095Two Swiss investors routed private equity fund management through a Jersey entity, retaining all advisory functions in their Swiss AG while allocating only one-third of fees offshore. The Swiss tax authority challenged the arrangement, arguing the Jersey entity lacked substance and the Swiss investors controlled all key risks. The Zurich...

Portugal vs J… – GESTÃO DE EMPRESAS DE RETALHO SGPS. S.A., February 2023, Administrative Court of Appeal, Case 657/07.1 BELSBA Portuguese retail group assigned its trademarks to a Swiss entity under long-term licence agreements, then continued paying royalties while bearing all costs and risks of brand management. The tax authority adjusted the royalty payments under the arm's length principle, arguing the transfers lacked economic substance. The Administrative Court of...

Sweden vs Pandox AB, February 2022, Administrative Court, Case No 12512-20, 12520–12523- 20 and 13265-20Sweden's Administrative Court ruled in favour of Pandox AB, a hotel property group parent, after tax authorities argued that affiliated property management entities controlled no real risks and deserved only a risk-free return, with residual profits reallocated to the Swedish parent. The court rejected the recharacterisation, finding the tax authority...

Sweden vs AB bioMérieux, March 2016, Administrative Court of Appeal, Case No 7416-14AB bioMérieux entered a trademark and know-how licence agreement with its French parent, then reduced activities and transferred key personnel abroad. Swedish tax authorities assessed additional taxable income, finding the arrangement constituted a transfer of intangible value. The Administrative Court of Appeal upheld the assessment in 2016, concluding that while...

France vs SASU A. Menarini Diagnostics France, May 2025, Conseil d’État, Case No. 491058 (ECLI:FR:CECHR:2025:491058.20250507)A French subsidiary of the Menarini Group, consistently reporting operating losses, faced transfer pricing adjustments after tax authorities found it had overpaid related Italian entities for purchased products, constituting indirect profit transfers under Article 57 of the French General Tax Code. The Conseil d'État partially allowed the appeal in May...

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TPG2022 Chapter VI paragraph 6.41

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