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Vergide Gündem
English Translation

Pricing of hard-to-value intangibles

The term hard-to-value intangibles (HTVI) covers intangibles or rights in intangibles
for which, at the time of their transfer between associated enterprises, (i) no
reliable comparables exist, and (ii) at the time the transactions was entered into,
the projections of future cash flows or income expected to be derived from the
transferred intangible, or the assumptions used in valuing the intangible are highly
uncertain, making it difficult to predict the level of ultimate success of the intangible
at the time of the transfer. 1

Transactions involving the transfer or the use of HTVI may exhibit one or more of the
following features.

• The intangible is only partially developed at the time of the transfer.
• The intangible is not expected to be exploited commercially until several years
following the transaction.
• The intangible does not itself fall within the definition of HTVI but is integral to the
development or enhancement of other intangibles which fall within that definition
of HTVI.
• The intangible is expected to be exploited in a manner that is novel at the time of
the transfer and the absence of a track record of development or exploitation of
similar intangibles makes projections highly uncertain.
• The intangible, meeting the definition of HTVI has been transferred to an
associated enterprise for a lump sum payment.
2
• The intangible is either used in connection with or developed under a CCA or
similar arrangements. 3

A tax administration may find it difficult to establish or verify what developments
or events might be considered relevant for the pricing of a transaction involving
the transfer of intangibles or rights in intangibles, and the extent to which the
occurrence of such developments or events, or the direction they take, might have
been foreseen or reasonably foreseeable at the time the transaction was entered
into. The developments or events that might be of relevance for the valuation of
an intangible are in most cases strongly connected to the business environment in
which that intangible is developed or exploited. Therefore, the assessment of which
developments or events are relevant and whether the occurrence and direction of
such developments or events might have been foreseen or reasonably foreseeable
requires specialised knowledge, expertise and insight into the business environment
in which the intangible is developed or exploited. In addition, the assessments that
are prudent to undertake when evaluating the transfer of intangibles or rights
in intangibles in an uncontrolled transaction, may not be seen as necessary or
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useful for other than transfer pricing purposes by the MNE group when a transfer
takes place within the group, with the result that those assessments may not be
1 OECD Transfer Pricing Guidelines, 2022, paragraph 6.189.
2 Cost Contribution Arrangements, CCA is a contractual arrangement among business enterprises
to share the contributions and risks involved in the joint development, production or the obtaining
of intangibles, tangible assets or services with the understanding that such intangibles, tangible
assets or services are expected to create benefits for the individual businesses of each of the
participants. OECD Transfer Pricing Guidelines, 2022, paragraph 8.3.
3 OECD Transfer Pricing Guidelines, 2022, paragraph 6.190.
4 Multinational Enterprises

10 November 2022