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Intellectual Property Transfer Pricing

 

Due to globalization trends, goods and intellectual property are crossing international borders between related parties at a record pace. Although your cross-border transactions may appear to be seamless, the IRS and other tax authorities are watching closely. In every instance, tax authorities strive to ensure that the prices set for IP that cross international borders are set at "arms-length" prices.

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Transfer pricing policies will be impacted by a variety of circumstances including: the transfer of IP ownership across international borders - whether the change in assignee is for business purposes or tax purposes, inter-company licensing of IP across international borders, and products produced utilizing IP and subsequently sold to related parties across international borders. These situations need to be carefully documented and your company may have significant risk if you do not have the appropriate transfer pricing studies in place. From our experience it is common to see penalties assessed and fees based on the adjustment that the taxing authority determines is just.  A penalty equal to 10 to 40 percent of the adjustment plus interest is not uncommon.

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Borman & Company has the experience to establish transfer pricing documentation to support your transfer pricing policies that should withstand the scrutiny of the taxing authorities.