Transfer Pricing License Agreement

Thus, you grant a patent for royalties: if you have invented a new product, you can either put it on the market yourself, or grant the intellectual property rights of third parties. It should be ensured that intercompany agreements correspond to reality, respect transfer pricing documentation and comply with market standards. Transfer pricing agreements between related companies need to be formalised in intercompany agreements in order to make them legally binding, comply with transfer pricing legislation and ensure an adequate line of defence against challenges from tax authorities. If you don`t, your business is exposed to serious and unnecessary risk. There are several methods that multinational enterprises (MNEs) and tax administrations can use to determine precise borrowing prices for transactions between related companies. The Organisation for Economic Co-operation and Development (OECD) outlines five main transfer pricing methods that NNMs and tax administrations can use. If you`re setting transfer pricing, doing a transfer pricing analysis, evaluating intellectual property assets, conducting a business valuation, creating a license agreement, or dealing with a case of infringement, you need to understand intellectual property. If you need transfer pricing intercompany agreements for your controlled transactions, we have something for you. An intercompany agreement (also known as an «intra-group contract» or «transfer pricing agreement») is a contract (signed) between two or more related companies. Such a contract governs the general terms and conditions of sale (GTC) of controlled transactions, such as.B. the supply of goods or services from one related company to another related company. On this page, you will learn how to calculate transaction fees and use reliable comparative data to strengthen your trading position or ensure that your transfer prices are respected. On the other hand, a third-party agreement is the result of negotiations on the GTC by two independent companies that ensure their own interests.

Normally, such an agreement is carefully developed and reviewed before being accepted by both companies. It is unlikely that either party will be able to unilaterally dictate the GTC of the agreement. This model is part of LCN`s legal «toolbox», which has practical resources and intercompensation agreements to make it easier for companies and transfer pricing experts to enter into business-to-business agreements to support their transfer pricing compliance. For more information about the toolkit, click here. The tax authorities are not convinced that Pjotr Plastic complies with transfer pricing laws. It intends to (i) verify whether the allocation of risks, assets and functions on which transfer pricing agreements are based is consistent with the actual agreements and (ii) whether related undertakings have accepted transfer pricing agreements. In the absence of intercompany agreements, Pjotr Plastic now has to provide further evidence and convince the tax authorities that its transfer pricing position is indeed the same as it claims – perhaps a tedious and costly discussion. This could have been avoided. The royalties you can charge for licensing vary from industry to industry. If you are entering into a trademark license agreement or performing a transfer pricing analysis for an internal transfer of trademark rights, it is useful to know what the typical industry rates are.

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