On behalf of a large European-headquartered luxury goods company, NERA reviewed and redesigned the internal pricing policy of the group with regards to the ownership of intangibles. The project involved NERA gaining a detailed understanding of the roles and responsibilities of core entities within the company and designing a transfer pricing policy based on the application of the residual profit split method to determine the remuneration of entities in the group that owns and contributes to developing the core intangibles of the group, including the luxury firm’s brand. 

NERA’s methodologies are being relied upon in an ongoing tax audit and an advance pricing agreement being negotiated ex ante with tax authorities in several European countries in which the group has significant operations. Advance pricing agreements are long-terms agreements entered into between MNEs and tax authorities to define the principle of the allocation of profit across entities and secure the MNE’s tax position.