In the fourth of a series of articles in International Tax Review on intangibles, NERA Principal Philip de Homont and Affiliated Consultant Dr. Alexander Voegele examined challenges that the automotive industry faces in light of the Base Erosion and Profit Shifting (BEPS) measures taken by the Organisation for Economic Co-Operation and Development (OECD).

The article, “Intangible Contributions in the Automotive Industry Under BEPS,” which appeared in the January 2016 issue of the tax journal, discussed how the OECD’s decision to vastly broaden the concept of “intangibles,” such as informal know-how and best practices, has created serious issues for many contract R&D structures. Transfer pricing systems must take into account intangibles that are created by many entities with vastly different contributions, such as personnel, financing, or labs, or contributions at different times and of varying significance.

Mr. de Homont and Dr. Voegele explained methods for addressing these issues in a recent case that involved the development of new electronic devices in the automotive industry. These methods helped create a system that the client could implement easily and use for future price setting.