Transfer Pricing Report: Intangible Property, Tangible Profits

This report, "Transfer Pricing: Intangible Property, Tangible Profits," published by Edgeworth Economics and ALM Legal Intelligence, illuminates key issues in transfer pricing for intangibles and provides practical guidance on how practitioners are executing their transfer pricing strategies.

Among its key findings:

• 66 percent of law firms work with at least some of their tax clients to identify and document all relevant intangible assets for transfer pricing.
• 23 percent of law firms surveyed had clients with effective tax rates between 31 percent and 35 percent, and half had clients with tax rates between 21 percent and 30 percent.

• Almost three-quarters (73 percent) of law firms recommend that their clients align intangible transactional arrangements around business operations, with 75 percent also suggesting the client locate managerial functions with the owner of the intangibles.

• While 52 percent of firms suggest that clients wait for further developments before shifting substantive operations around intangibles in response to recent OECD recommendations, 76 percent of companies reported themselves as already doing so. Nevertheless, only 3 percent of law firm respondents say they see managerial functions and ownership together “most of the time” in agreements between independent parties.

• No law firms or companies characterized their tax positions as “very aggressive.” Still, 40 percent of law firms expect anywhere from 26 percent to 75 percent of their tax clients to see a significant tax adjustment on intangible asset transfer pricing over the next three to five years. But 59 percent of law firms expect less than a quarter of their clients to see a significant tax adjustment in that time frame. Among companies, 67 percent were somewhat or very concerned about tax adjustments.