Pricing the Transfer of Intellectual Property as a Problem of Second-Best Tax Policy

Wolfram Richter and Markus Breuer

No 5340, CESifo Working Paper Series from CESifo

Abstract: The adequate pricing of intellectual property (“IP”) for tax reporting is a largely unsettled issue. Transactional profit-based methods are on the rise although only rated as “methods of last resort” by the OECD. This paper focuses on regulated profit splitting and compares this transfer pricing rule with one allowing multinationals to price IP freely subject to the constraint that the price used for tax reporting is also used internally. The standard of comparison is global efficiency in R&D. The model is one of second best. It allows for internationally differentiated tax rates and non-deductible effort costs in the production of know-how.

Keywords: transfer pricing rule; intellectual property; profit split method; allocational efficiency; second-best policy (search for similar items in EconPapers)
JEL-codes: F23 H25 M48 O34 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp5340.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5340

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().