Internet retail: transfer of IP overseas

Internet retailers who wish to take advantage of an offshore base for fulfilment will need to be aware of the tax implications of transfer of assets abroad legislation.  Assets such as domain names, brand names, trade marks, customer databases and other similar assets will be utilised by the overseas fulfilment operations and therefore tax-efficient strategies should be employed to minimise potential tax liabilities such as capital gains or income  tax. 

Transfer pricing considerations will play an important part in formulating tax-efficient strategies.  Assets such as customer databases or brand names may need to be sold or licensed to the overseas fulfilment operation at arm’s length and at fair market value.  Therefore thought to these issues should be given before implementation and professional advice should be sought.