Treatment of US multinational IP transfers in a Pillar Two world

IP transactions require careful analysis from both US federal income tax and foreign tax perspectives. Generally accepted accounting principles and local statutory accounting consequences must also be considered. While tax and accounting professionals often are accustomed to dealing with these topics, Pillar Two has introduced a new dimension to the analysis of IP transactions, with rules spread across various guidance and treatment heavily influenced by a transaction’s timing. These complexities make it critical for US MNEs to understand the Pillar Two implications of both domestic and cross-border IP transactions.

In their article, Yen and Chung provide an overview of the relevant aspects of the GloBE rules and highlight some common fact patterns around IP transactions, examining how each transaction might be treated for GloBE purposes and noting areas of complexity and unanswered questions that would benefit from additional clarity.