This is a challenging area, so I suggest some legal advice is worth investing in. However, you may be able to use a set of principles around transfer pricing that should mitigate some, if not all, of the legal risk.
The main driver, as I understand it, is the notion of arms-length pricing. You need to be able to demonstrate to the tax authorities on both sides, if audited, that the price you charged for IP is calculated in a fashion that would be no different if you were transferring that IP to a 3rd party company, rather than a firm that is a member of your group/holding company, or even to a firm where it can be shown that you have a sufficient (equity) interest for there to be a (potential) conflict of interest.
You will be in hot water if the taxman thinks that you are massively under-pricing the IP as you transfer it between entities in a group or that you have a financial interest in.
Update (as a result of your comment):
This becomes the more general question then, of how one attaches a value to IP. The answer is not an easy one.
Some thoughts are:
- how much did it cost you to make the IP (e.g., time, materials, etc)? This, you could argue, is fair value (and indeed, doing so would be best from a TP perspective, as the value should be the lowest of all the valuation techniques available to you).
- how much could you make if you monetised the IP into a product and sold it for a period of time. You could then do a Discounted Cash Flow analysis of this cashflow projection to work out a fair value.
- how much would a 3rd party pay for this IP? If you could obtain 2-3 objective, 3rd party estimates or "offers" for the IP, it would strengthen the basis of the valuation.
- can you cite cases where IP of a similar class/category was valued from an arms-length perspective that can add credence to your valuation of your own IP?
There are a number of ways of valuing a company which would incorporate or suggest models for doing this.
I'd guess that the taxman is not going to be an expert on this, any more than you will be. As long as you can meet the arms-length test you should be clear of tax troubles.
Its probably worth talking to an accountant, or buying a book on the subject.
It goes without saying though, that this will all depend on the nature and complexity of the IP under consideration.
