Business Restructuring regarding cross-border transfer of Intangible Property

This thesis aims to highlight the issues that arise when multinational enterprises restructure their business and transfer intangible assets to another tax jurisdiction. This thesis also examines whether the OECD Transfer Pricing Guidelines chapter IX regarding intangible assets provide clarity that is satisfactory for taxpayers and tax authorities when MNEs restructure their business and transfer their intangible assets to an associated enterprise located in another state. In July 2010 the OECD Transfer Pricing Guidelines were updated and a completely new chapter was introduced in the guidelines. Chapter IX of the Transfer pricing guidelines contains guidance concerning the Transfer Pricing aspect of business restructurings. A business restructuring may involve cross-border transfers of valuable intangible assets or termination of existing contracts between associated companies. Both taxpayers and tax authorities apply the OECD Transfer Pricing Guidelines in its practice for transfer pricing. However, states interpret the guidelines differently but it is still important to have guidance that it is reliable for both taxpayers and tax authorities. The conclusion of this thesis is that there are substantial issues to be solved when MNEs business restructure and transfer intangible assets. The absence of a clear definition of intangible property, business restructuring and the term “transfer of something of value” creates uncertainty for taxpayers. It would be preferable to have more guidance for identification and valuation issues of intangible property. The absence of a reliable method when determining the value of the intangible may result in double taxation. The absence of harmonisation between the member states when determining the ownership of the intangible and the need for clarity in the OECD Transfer Pricing guidelines of the term of economic ownership is of importance. The absence of clear definitions and the lack of guidance result in different interpretation in the OECD member states and substantially increase the risks for disputes between taxpayers and tax authorities with double taxation as a consequence. (Less)