Intellectual Property Opportunities
|October 29 2010|
US tax law with respect to the development, ownership, and licensing of intellectual and intangible properties including trademarks, trade names, franchises and patents involves the marriage of both valuation and transfer pricing principles.
Transfer pricing embodies the arms-length standard and is essentially the value determination of such standard. As we know it today, valuation is part “art” and part “science”, thus fostering the outcome of the ultimate tax treatment of such transactions involving intellectual and other intangible properties, with the final result hinging on the facts and circumstances of each particular case.
In a period in which the prices that companies can charge for their goods and services are permanently under pressure, it appears that only companies that have valuable intangibles can actually offer unique products and services and thus escape the continuing process of price erosion.
This explains why large companies especially perform much better financially as they appear to be the preeminent owners of distinctive intangibles, in particular strong brand names. Moreover the rapidly increasing significance of trademarks and other intangibles has given rise to the necessity or desirability of including the value of trademarks developed by a company itself in that company’s annual accounts.
A trademark’s commercial exploitation on an international scale obviously has major cost advantages. Not only are international groups ideally positioned to develop and exploit trademarks in a regional or global context, but they can also introduce a successful trademark that was developed locally in other markets.
In various countries, the financial significance of trademarks to trade and industry, and in particular the above-described tendency towards the development and use of trademarks on a regional or even global scale, has led to detailed tax rules, including the U.S. transfer pricing rules and the OECD transfer pricing guidelines. Cherry, Bekaert & Holland (CB&H) navigates for you the complex intellectual property transfer and source of income rules, including:
PDF format, 421KB.
Cherry, Bekaert & Holland, L.L.P.
|Last Updated ( October 29 2010 )|
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