Page 44 - Strategic Tax Planning for Global Commerce & Investment

Cross Border Tax Planning Strategies

 It can use it in its own business, for exam-
ple, the business of a conventional full risk
manufacturer or;

 The business of a principal (the risk taker)
under a toll or contract manufacturing
agreement or by charging a royalty to an-
other company in multinational group
who in turn uses the IP in tis own business.

From the tax perspective the important factors will be:

 The effective tax rate to which the IP com-
pany will be subject, including not only the
applicable corporate tax rate but also the
deductibility of R&D and depreciation for

the purchased IP.
 The double tax treaty network of the juris-
diction in question.
 The taxation of the profit distributed by
the IP company to its ultimate intermediate
parent and,
 The applicable considerations of the taxa-

tion of Controlled Foreign Companies
(CFC) of the jurisdiction in question.

The Migration of IP

Generally, it is relatively easy for a multinational to ensure that
new IP arises wherever desired. It is far less easy to transfer
existing IP without tax considerations.

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