Transfer Pricing

Intercompany trademark royalty fees: practical experience and a Swiss Supreme Court Case

Having a strong trademark has always been a vital part of business, but it may be more important now than ever before, since consumers are exposed to new brands every day through social media and differentiation via a well-known brand is key.

In a B2C business, the brand is important as it has an unquestionable impact on end-customer choices. Similarly, in a B2B context, it is empirically proven that customers prefer to enter into business relationships with well-known suppliers associated with a lower business risk and higher quality.

As intangibles, including trademarks, take a central role in the value chain of most industries, tax authorities are increasingly concerned that tax base erosion can be attained by multinational enterprises (MNEs) shifting profit in low-tax jurisdictions through cross-border transactions involving the transfer and licensing of intangibles.

In their article for ITR Monika Bieri and Caterina Colling Russo share their practical experience regarding intercompany trademark royalty fees, taking inspiration from a recent Swiss Supreme Court case in which an intercompany trademark royalty was at the centre of the dispute.

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