The globalisation of brand names and technology has led many firms to take steps to identify where the value of their business lies. By their nature, transfers of intangible property are harder to identify than transfers of tangible goods. Yet, as tax authorities become more sophisticated the likelihood of them identifying a transfer of intangible property increases.
According to the OECD Guidelines1, the arm's length principle must be applied to transfers of intangible property just as much as any other type of transaction. This means that for an intangible item a comparability analysis must be performed and the relevant risks which are assumed by any relevant parties should be assessed as discussed in B4.131–B4.132. However there are some specific considerations in relation to intangible items which are described further below.
Definition of intangible items for transfer pricing
Intangible property is defined in the OECD Guidelines very widely as 'something which is not a physical asset or a financial asset, which is capable of being owned or controlled for use in commercial activities, and whose use would
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