Intangibles, DEMPE and IP remuneration
Analysis of IP ownership, DEMPE functions, licence or franchise models and intangible-related remuneration.
Transfer pricing for intangibles requires more than identifying legal ownership. We help clients analyse IP-related value creation, royalty models and an arm’s length remuneration for entities involved in the development, enhancement, maintenance, protection and exploitation (“DEMPE”) of intangibles.
Why this matters
Tax authorities increasingly focus on whether the economic return from intangibles is allocated to the entities that control risks, perform key functions and have the financial capacity to assume those risks. Legal ownership alone is not sufficient. Groups need evidence showing who makes decisions, who manages risks, who funds development and how IP-related returns are priced.
How we help
- Map intangible assets and IP flows: identify legal ownership, licensing arrangements, development activities, funding, exploitation and users of intangibles.
- Perform DEMPE analysis: analyse the functions, decision-making and risk control related to the development, enhancement, maintenance, protection and exploitation of IP.
- Design remuneration models: support royalty rates, residual profit allocations, cost contribution arrangements or service remunerations where relevant.
- Prepare economic evidence: perform royalty benchmarking or other analyses using recognised data sources and transaction-specific assumptions.
- Assess migration and restructuring issues: analyse IP transfers, changes in ownership or changes to licensing arrangements.
- Support audit defence and tax certainty: prepare documentation, position papers or APA/ruling support for IP-related arrangements.
Typical deliverables
- DEMPE analysis and intangible value chain mapping
- Royalty benchmarking and IP economic analysis
- IP migration and valuation support
- Cost contribution arrangement review
- Intercompany licence agreement support
- Documentation of legal and economic ownership alignment
- APA or ruling support for IP arrangements
Typical triggers
- New IP ownership or licensing model
- Development of valuable technology, brands or know-how
- Joint development activities
- Centralisation or migration of IP
- Material royalties or residual profit allocations
- Questions about legal versus economic ownership
- Considerations regarding hard-to-value intangibles
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