Profit Participating Intellectual Property
This article, by NERA Special Consultant Dr. Alexander Voegele, Principal Bastian Gottschling, and Economic Analyst Philip de Homont, is the fifth in a series of ten articles produced by International Tax Review on tax-effective intellectual property management. The article presents a case study examining profit participating intellectual property. The authors examine a company that develops and constructs modern power plants. While the company is highly profitable in its home market, during a start-up phase in new markets the local entities of the company often incur losses for some time. The authors note that, to yield a well-founded and flexible royalty, the actual benefits that the local entities receive in their own markets must be demonstrated through a rigorous analysis of the economic fundamentals.