Friday, April 26, 2013
Marketing Intangible: concepts and issues
Meaning of intangibles
Intangible (according to OECD) is something which is not a physical asset or a financial asset and capable of being owned or controlled for use in commercial activities.
Marketing intangibles are not defined anywhere in detailed but in general it comprises of trademark, trade names, marketing strategies, customer lists etc.
Ownership of intangibles
Legal owner- a company, having ownership license legally acquired by registering the trademark.
Economic owner- a company which is exploiting the license (provided by licensee) with performing significant people functions.
Issue of marketing intangible
The dispute arises when the Advertisement, Marketing & Promotion expenses (‘AMP’) incurred by the taxpayer is compared by the tax authorities to AMP expenses of selected independent comparables and the differential is claimed to be in ‘excess’. The ‘excess’ AMP is presumed to be contributing towards the brand development and hence creates marketing intangible for the licensor. Such excess AMP spend therefore, either disallowed or a claim for equivalent compensation from the licensor is made.
Bright Line test
The term ‘Bright Line Test’ had been used by US Court of appeal in case of ‘DHL’
“The bright line test notes that, while every licensee or distributor is expected to spend a certain amount of cost to exploit the items of intangible property which it is provided, it is when the investment crosses the ‘bright line’ of the routine expenditure into realm of non-routine that economic ownership is created.”
Bright Line test/Excess AMP test= Total AMP spend- Bright line of AMP spend (routine expenses).
Intangible (according to OECD) is something which is not a physical asset or a financial asset and capable of being owned or controlled for use in commercial activities.
Marketing intangibles are not defined anywhere in detailed but in general it comprises of trademark, trade names, marketing strategies, customer lists etc.
Ownership of intangibles
Legal owner- a company, having ownership license legally acquired by registering the trademark.
Economic owner- a company which is exploiting the license (provided by licensee) with performing significant people functions.
Issue of marketing intangible
The dispute arises when the Advertisement, Marketing & Promotion expenses (‘AMP’) incurred by the taxpayer is compared by the tax authorities to AMP expenses of selected independent comparables and the differential is claimed to be in ‘excess’. The ‘excess’ AMP is presumed to be contributing towards the brand development and hence creates marketing intangible for the licensor. Such excess AMP spend therefore, either disallowed or a claim for equivalent compensation from the licensor is made.
Bright Line test
The term ‘Bright Line Test’ had been used by US Court of appeal in case of ‘DHL’
“The bright line test notes that, while every licensee or distributor is expected to spend a certain amount of cost to exploit the items of intangible property which it is provided, it is when the investment crosses the ‘bright line’ of the routine expenditure into realm of non-routine that economic ownership is created.”
Bright Line test/Excess AMP test= Total AMP spend- Bright line of AMP spend (routine expenses).
Meaning of intangibles
Intangible (according to OECD) is something which is not a physical asset or a financial asset and capable of being owned or controlled for use in commercial activities.
Marketing intangibles are not defined anywhere in detailed but in general it comprises of trademark, trade names, marketing strategies, customer lists etc.
Ownership of intangibles
Legal owner- a company, having ownership license legally acquired by registering the trademark.
Economic owner- a company which is exploiting the license (provided by licensee) with performing significant people functions.
Issue of marketing intangible
The dispute arises when the Advertisement, Marketing & Promotion expenses (‘AMP’) incurred by the taxpayer is compared by the tax authorities to AMP expenses of selected independent comparables and the differential is claimed to be in ‘excess’. The ‘excess’ AMP is presumed to be contributing towards the brand development and hence creates marketing intangible for the licensor. Such excess AMP spend therefore, either disallowed or a claim for equivalent compensation from the licensor is made.
Bright Line test
The term ‘Bright Line Test’ had been used by US Court of appeal in case of ‘DHL’
“The bright line test notes that, while every licensee or distributor is expected to spend a certain amount of cost to exploit the items of intangible property which it is provided, it is when the investment crosses the ‘bright line’ of the routine expenditure into realm of non-routine that economic ownership is created.”
Bright Line test/Excess AMP test= Total AMP spend- Bright line of AMP spend (routine expenses).
Intangible (according to OECD) is something which is not a physical asset or a financial asset and capable of being owned or controlled for use in commercial activities.
Marketing intangibles are not defined anywhere in detailed but in general it comprises of trademark, trade names, marketing strategies, customer lists etc.
Ownership of intangibles
Legal owner- a company, having ownership license legally acquired by registering the trademark.
Economic owner- a company which is exploiting the license (provided by licensee) with performing significant people functions.
Issue of marketing intangible
The dispute arises when the Advertisement, Marketing & Promotion expenses (‘AMP’) incurred by the taxpayer is compared by the tax authorities to AMP expenses of selected independent comparables and the differential is claimed to be in ‘excess’. The ‘excess’ AMP is presumed to be contributing towards the brand development and hence creates marketing intangible for the licensor. Such excess AMP spend therefore, either disallowed or a claim for equivalent compensation from the licensor is made.
Bright Line test
The term ‘Bright Line Test’ had been used by US Court of appeal in case of ‘DHL’
“The bright line test notes that, while every licensee or distributor is expected to spend a certain amount of cost to exploit the items of intangible property which it is provided, it is when the investment crosses the ‘bright line’ of the routine expenditure into realm of non-routine that economic ownership is created.”
Bright Line test/Excess AMP test= Total AMP spend- Bright line of AMP spend (routine expenses).
Subscribe to:
Posts (Atom)