Royalty fees from a transfer pricing perspective

This thesis addresses the issue of royalty fees between related parties from a transfer pricing perspective. The theoretical part focuses on the fundamental principles of transfer pricing, the legal framework, the methods for determining transfer prices, the specific features of licensing intangible assets, and, last but not least, recent developments in tax audits conducted by the tax authorities in the area of transfer pricing. The practical part analyses a specific transaction between two related parties. A DEMPE analysis is conducted, followed by a benchmarking of the royalty rate using the commercial RoyaltyRange and the publicly available EDGAR databases. The thesis further compares the applicability and limitations of both databases and offers recommendations for the proper determination and documentation of royalty fees in line with the arm’s length principle, ensuring compliance during transfer pricing audits.