1. Andrew Hickman
Head of Transfer Pricing Unit
Centre for Tax Policy and Administration
Organization for Economic Cooperation and Development
2 rue André-Pascal
75775, Paris
Cedex 16
France
Submitted by email: TransferPricing@oecd.org
June 18, 2015
Ref: OECD DISCUSSION DRAFT: BEPS ACTION 8, HARD-TO-VALUE INTANGIBLES
Dear Mr. Hickman:
Deloitte Tax LLP1 (“Deloitte”) appreciates the opportunity to submit comments, on behalf of the
Deloitte U.S. tax practice, regarding the Organization for Economic Cooperation and
Development’s (OECD’s) Discussion Draft on BEPS Action 8: Hard-To-Value Intangibles (“HTVI”)
(the “Discussion Draft”) and to contribute to the commentary that will take place at the public
consultation scheduled for July 6-7, 2015, at the OECD’s headquarters in Paris.
Comments
Paragraph 9 of the DiscussionDraft sets out approaches that tax authorities “may” adopt in dealing
with HTVIs. Deloitte believes that if such guidance is included in the Transfer Pricing Guidelines, it
should not be optional. The use of the word “may” suggests that tax administrators have the option
of applying the guidance or not. If a tax authority determines that the guidance applies to a
transaction, the tax administrator in the counterparty jurisdiction should not have the option to
elect not to apply the guidance, because if one tax administrator properly applies the guidance to
increase taxation in its jurisdiction, and the tax administrator in the counterparty jurisdiction
chooses not to apply the guidance, double taxation will result.
Deloitte believes that the examples in Paragraph 10 of intangibles that exhibit features of HTVIs
are not clear and, as a practical matter, could be interpreted to include virtually every intangible
transaction. For example, it is unclear which intangibles would fall within the definition of a
1
Deloitte Tax LLP is the U.S. member firm of Deloitte Touche Tohmatsu Limited, a UK private
company limited by guarantee (“DTTL”). DTTL and each of its member firms are separate and
distinct legal entities. DTTL itself does not provide professional services of any kind. Please see
www.deloitte.com/about for a detailed description of DTTL and its member firms.
Deloitte Tax LLP
555 12th Street, NW
Suite 400
Washington, DC 20004
USA
Tel: +1 202 879 5610
Fax: + 1 203 423 6871
www.deloitte.com
Member of
Deloitte Touche Tohmatsu Limited

2. Andrew Hickman
June 18, 2015
Page 2
“partially developed” intangible. Is a partially developed intangible an intangible that has not
been commercialized, or is it an intangible that will be further developed or enhanced? If the
definition is an intangible that will be further developed or enhanced, few technical or scientific
intangibles in today’s fast-moving environment are not subject to further development or
enhancement. Similarly, virtually no brands are static; rather, they are constantly subject to
further development and enhancement. Other examples in the paragraph use imprecise terms
and phrases, such as “several years following the transaction” and “novel,” which could be
interpreted expansively. Deloitte believes the examples should be either substantially tightened
or deleted.
Deloitte is concerned that the Discussion Draft could significantly increase uncertainty and
controversy regarding the correct transfer price of intangibles in virtually every case, because
deviations from ex ante expectations occur in practically every related and unrelated intangible
transaction.2 Deloitte welcomes the opportunity offered in the Discussion Draft to provide
suggestions to increase certainty for taxpayers on the application of the guidance, including
suggestions on when deviations should not be considered “significant.” Deloitte believes that the
adoption of the following two safe harbors will decrease uncertainty and controversy while not
inappropriately limiting tax authorities’ ability to apply the principles contained in the Discussion
Draft:
• Because deviations from ex ante expectations occur in virtually every unrelated and
related-party intangible transaction, adoption of a safe harbor that would require the
deviation between ex ante and ex post results to be greater than 120 percent or less than 80
percent of the expected ex ante value before allowing the application of the HTVI guidance
would be helpful in reducing uncertainty.
• Similarly, limiting the time frame for the application of the HTVI guidance would
increase certainty and be consistent with the arm’s length standard. We suggest limiting the
period during which the HTVI guidance can be applied to no more than 10 years after the
transaction, except in situations involving extremely long periods before commercialization.
Experience suggests that projections beyond that period by both unrelated and related
parties are almost always subject to “significant” deviation, because the range of potential
outcomes increases over longer periods of time.3
Paragraph 14 of the Discussion Draft states that unforeseeable and extraordinary developments
or events that occur after the determination of the price could not have reasonably been taken
into account in determining the arm’s length price. Examples of unforeseeable and
extraordinary developments are natural disasters and bankruptcy of a competitor. Deloitte
believes that unforeseeable and extraordinary events are better defined as low-probability
events outside the control of the taxpayer whose impact on the transaction is highly uncertain.
2
Because valuations are performed ex ante based on probability-weighted averages, but ex post
results are determined based on the actual realization of risk, by definition ex post results will
diverge from ex ante averages.
3 See footnote 2.

3. Andrew Hickman
June 18, 2015
Page 3
We agree that natural disasters and a competitor’s bankruptcy fall within this category, but we
also believe that unforeseen governmental actions and major unanticipated macroeconomic
events (recessions, depressions, or greater than expected economic growth) also fall within this
category and should be added to the list to provide additional clarity. In our experience, these
low-probability events rarely have a significant impact on the prices of transactions, but when
they do occur they have a significant impact on ex post outcomes.
Paragraph 3 of the Discussion Draft states that unrelated parties may include price adjustment
clauses in their agreements as a method to account for uncertainty in some situations.
Paragraph 19 of the Discussion Draft on Cost Contribution Arrangements issued on April 29,
2015, acknowledged the validity of such adjustment clauses. Deloitte believes that the
Discussion Draft should specifically acknowledge that price adjustment clauses negotiated at the
time of the transaction permitting price adjustments that increase and decrease originally
negotiated prices based on clear criteria and consistent with third-party transactions should be
respected as consistent with the arm’s length standard.
We hope Deloitte’s comments are useful and provide thoughtful observations on some of the
positions taken in the Discussion Draft. We welcome any questions you may have in connection
with these comments. Please contact John Wells (johnwells@deloitte.com) or Philippe Penelle
(ppenelle@deloitte.com) if you have any questions about this submission or wish to discuss any
of the issues discussed herein.
Sincerely,
John M. Wells
U.S. Transfer Pricing Leader
Deloitte Tax LLP