INTM467190 - Establishing the arm's length price: gathering your own evidence

Press reports

The printed word is not dead yet. The business pages of the Financial Times can yield useful little nuggets of information that can help give you some idea of the type of brands and products that are licensed between independent parties and sometimes the royalty rate payable under such an agreement. Be aware though that such information may be speculative and probably incomplete. In itself, such information is not a comparable, but it can help to give you some perspective on your own case. If a toy company was prepared to pay royalties of 12% on end sales of Harry Potter merchandise (as was reported in the press), would the same toy company be prepared to pay, say, a 15% royalty on end sales of a new toy range which is completely unknown in the UK and has no brand recognition? In all probability, no, and so any transfer pricing report that produces such a royalty would need to be viewed very critically.