Transfer pricing for luxury goods is complex due to intangible assets like brand value and intellectual property. Brand strength significantly influences pricing decisions between related entities, especially when subsidiaries contribute to brand promotion and market development. Traditional methods like the Resale Price Method (RPM) or the Comparable Uncontrolled Price Method (CUP) may not capture this intangible value, leading to potential tax disputes. Cases such as Ferragamo France and Dolce & Gabbana highlight the need for careful comparability analyses, proper documentation, and alignment with arm’s length pricing principles to ensure fair compensation for subsidiaries and compliance with tax regulations.
