Transfer Pricing for iGaming: IP-Holding Structures, Brand Royalties, and Arm’s-Length Mechanics

OECD Transfer Pricing Guidelines Chapter VI, as revised by the BEPS Actions 8-10 final report, governs how iGaming groups must price intercompany transactions involving intellectual property. The rules address the three central structures that dominate the industry: an IP holding entity licensing a gaming platform to operating subsidiaries, a parent brand owner collecting royalties from locally licensed affiliates, and a content provider supplying games under an intercompany B2B arrangement. In each case, the governing principle is identical: associated enterprises must transact as if they were independent parties dealing at arm’s length, and legal ownership of an intangible does not, by itself, entitle the holding entity to the income that intangible generates.

What Qualifies as an Intangible Under the OECD Framework?

The OECD’s 2022 Transfer Pricing Guidelines define intangibles broadly as “something which is not a physical asset or a financial asset, which is capable of being owned or controlled for use in commercial activities, and whose use or transfer would be compensated had it occurred in a transaction between independent parties in comparable circumstances.” For iGaming groups, that definition captures a wide range of assets. It covers the gaming platform itself, proprietary random number generator (RNG) engines, game mathematics and algorithms, wagering software, customer databases, player behaviour data accumulated over time, brand names and associated trade marks, domain assets with market recognition, and Know-Your-Customer and responsible gambling technology developed in-house.

The Guidelines draw a distinction between trade intangibles and marketing intangibles. Trade intangibles include patents, know-how, and software. Marketing intangibles include trade names, trade marks, and customer relationships. Both categories are routine in iGaming group structures, and both attract the same arm’s length requirement. Critically, the Guidelines confirm that the labels applied to transactions do not control the transfer pricing analysis. Whether a group characterises a transaction as a sale of all patent rights, a perpetual exclusive licence, or a long-term sublicence, the functional analysis governs the pricing, not the document title.

DEMPE Functions: The Test That Overrides Legal Title

The BEPS Actions 8-10 guidance introduced the DEMPE framework as the operative test for allocating intangible returns among group members. DEMPE stands for Development, Enhancement, Maintenance, Protection, and Exploitation. Under OECD Transfer Pricing Guidelines paragraph 6.32, it is the entity that performs and controls these functions, uses the associated assets, and assumes the associated risks that is entitled to the returns generated by the intangible. An entity that holds legal title but outsources all DEMPE activity to other group members is not entitled to retain the bulk of the royalty income flowing from that intangible.

“A determination that a particular group member is the legal owner of intangibles does not, in and of itself, necessarily imply that the legal owner is entitled to any income generated by the business after compensating other members of the MNE group for their contributions in the form of functions performed, assets used, and risks assumed.”, OECD Transfer Pricing Guidelines 2022, Chapter VI, paragraph 6.47

For a typical iGaming IP holdco structure, this means the following analysis is required. The compliance team must map which entities actually develop the gaming software, who maintains and updates it on an ongoing basis, who funds the development costs, who makes decisions about upgrading the RNG or the platform architecture, who manages the trade mark registration programme and enforcement actions, and who bears the economic risk if the platform fails commercially. Where the IP holdco in, say, Malta or Gibraltar employs a small team whose functions are administrative and who exercise no real decision-making authority over these activities, tax administrations are entitled to recharacterise the arrangement and reallocate income to the entity that actually controls DEMPE.

OECD TP Guidelines paragraph 6.54 states explicitly that if the legal owner neither controls nor performs the functions related to development, enhancement, maintenance, protection or exploitation of the intangible, the legal owner would not be entitled to any ongoing benefit attributable to those outsourced functions. It may still receive a return commensurate with any assets it uses and risks it genuinely assumes, but that return is capped at a routine financial return, not the full royalty stream.

Arm’s Length Methods for Platform IP and Brand Royalties

When reliable comparable uncontrolled transactions exist, the Comparable Uncontrolled Price (CUP) method is the preferred approach under OECD TP Guidelines Chapter II. For iGaming platform licences and brand royalties, however, genuine comparables are rarely available. Proprietary gaming platforms incorporating years of accumulated game mathematics, player behaviour data, and integrated responsible gambling technology are by their nature unique. The absence of reliable external comparables typically directs practitioners toward the Transactional Profit Split method or, where the intangible is sufficiently unique and valuable, a valuation approach using discounted cash flow analysis.

OECD TP Guidelines paragraph 6.142 confirms that “the transfer pricing methods most likely to prove useful in matters involving transfers of one or more intangibles are the CUP method and the transactional profit split method.” Valuation techniques are treated as tools to support method selection rather than as independent methods. When a profit split is applied, the relevant profits to be split are determined by identifying the contributions each party makes to the combined outcome, measured by functions performed, assets used, and risks assumed. For iGaming groups, that analysis must capture the value contributed by the IP holdco’s genuine DEMPE activities relative to the value contributed by the operating entities’ player acquisition, market knowledge, customer service, and localisation functions.

The Transactional Net Margin Method (TNMM) is frequently applied where one party to the controlled transaction can be identified as performing relatively routine, benchmarkable functions. In a platform licensing arrangement where the operating subsidiary performs largely routine distribution and customer acquisition, the subsidiary can be tested as the less complex party using publicly available margin data for comparable distribution or service businesses. The residual return is then attributed to the IP holdco, but only where the IP holdco genuinely performs and controls the DEMPE functions that justify that residual.

Hard-to-Value Intangibles: The HTVI Regime and Its Practical Impact

OECD Transfer Pricing Guidelines Chapter VI, Section D.4 introduces a specific regime for hard-to-value intangibles (HTVI). An intangible qualifies as an HTVI under paragraph 6.189 where, at the time of the transfer, no reliable comparables exist and the projections of future cash flows or income expected from the intangible are highly uncertain. iGaming platform technology transferred between associated enterprises, particularly early-stage or in-development platforms, frequently meets both criteria.

The practical consequence of HTVI classification is significant. Tax administrations may use ex post outcomes as presumptive evidence about the reasonableness of the ex ante pricing assumptions applied at the time of the transfer. If a platform transferred from a UK operating entity to a Maltese IP holdco for a lump-sum consideration generates substantially higher returns than projected in the original valuation, the transferring jurisdiction’s tax authority can require the taxpayer to demonstrate that the original valuation appropriately accounted for that possibility. Where the taxpayer cannot demonstrate this, the authority is entitled to revise the arm’s length price upward and assess additional tax, potentially including penalties.

The HTVI presumption can be rebutted. Paragraph 6.193 of the 2022 Guidelines provides that the HTVI approach does not apply where the transfer is covered by a bilateral or multilateral Advance Pricing Agreement in effect for the period in question between the jurisdictions of the transferee and transferor. Groups that restructure IP ownership should seriously consider seeking bilateral APA coverage for the transfer itself. Annex II to Chapter VI confirms that APAs concluded bilaterally or multilaterally between competent authorities “provide an increased level of certainty in the jurisdictions involved, lessen the likelihood of double taxation, and may proactively prevent transfer pricing disputes.”

How Do Groups Actually Structure iGaming IP for Tax Purposes?

The predominant structure in the industry places intellectual property ownership in a jurisdiction with a favourable corporate tax regime, most commonly Malta, Gibraltar, the Isle of Man, or Curaçao. The IP holdco holds the platform technology, the brand, the gaming licences in certain jurisdictions, and the group-wide content library. It licences the platform and brand to locally licensed operating entities in regulated markets, charging royalties that reduce taxable profit in high-rate jurisdictions such as the UK (where Remote Gaming Duty under the Finance Act 2014 applies on top of corporation tax), France, Germany, or Sweden.

The OECD framework does not prohibit this structure. What it prohibits is pricing that does not reflect the genuine contribution of each entity. In practice, the most common audit challenge is that the IP holdco charges a royalty rate that attributes virtually all group profit to the holdco jurisdiction, leaving operating entities with only a thin routine return, while the IP holdco in fact performs minimal DEMPE activity. Tax authorities in the UK, Germany, Sweden, and the Netherlands have all demonstrated increasing willingness to challenge structures where the substance at the holdco level is insufficient to justify the royalty charged.

In November 2025, Tax Policy Associates, an independent UK tax policy research organisation, published an analysis of Sky Bet’s group structure, alleging that royalty payments from the UK operating entity to an offshore IP holdco could be reducing UK taxable profits by as much as £55 million annually. The analysis, which was published without response from the company and has not resulted in confirmed HMRC enforcement action, illustrates the heightened public and regulatory scrutiny that transfer pricing structures in the UK gambling sector now attract. iGaming groups operating under UKGC licences should expect HMRC enquiry periods on intercompany royalty arrangements to reflect this context.

Three-Tier Documentation: Master File, Local File, and Country-by-Country Reporting

BEPS Action 13, now incorporated into Chapter V of the 2022 OECD Transfer Pricing Guidelines, establishes a three-tier documentation structure that applies to MNE groups meeting the consolidated revenue threshold of EUR 750 million. Groups below this threshold are not subject to CbC reporting obligations under the OECD standard, but remain subject to master file and local file requirements wherever those have been enacted into domestic law, which in the EU applies across all member states following the EU’s implementation of the BEPS package.

Document	Scope	Primary Content	Timing
Master File	MNE group as a whole	Group structure, intangibles overview, intercompany financing, financial and tax positions	Reviewed and updated by tax return due date of ultimate parent
Local File	Each local entity	Specific intercompany transactions, functional analysis, comparability analysis, method selection	Finalised by local tax return due date
CbC Report	Groups above EUR 750m revenue	Revenue, profit, tax paid, employees, and assets by jurisdiction	Filed within 12 months of fiscal year end in parent jurisdiction, exchanged with partner jurisdictions

OECD TP Guidelines paragraph 5.18 specifies the content required in the master file. It must address the MNE group’s organisational and legal structure, the group’s intangibles, the group’s intercompany financial activities, and the group’s financial and tax positions. Where an iGaming group has multiple business lines operating largely independently, the Guidelines permit line-of-business presentation in the master file, but the entire master file must remain available to each jurisdiction to assure an appropriate overview of the group’s global business.

The local file must provide more detailed information relating to specific intercompany transactions. OECD TP Guidelines paragraph 5.22 confirms that the local file “supplements the master file and helps to meet the objective of assuring that the taxpayer has considered the arm’s length nature of its material transfer pricing positions.” For iGaming groups, the local file for each operating entity must document the specific royalty arrangements with the IP holdco, the functional analysis supporting the royalty rate, the method selected and why, and the comparables or valuation analysis underpinning the pricing.

OECD TP Guidelines paragraph 5.30 recommends that the local file be finalised no later than the due date for filing the tax return for the fiscal year in question. Documentation prepared after an audit commences carries materially reduced weight and, in many EU jurisdictions, triggers an automatic shift in the burden of proof to the taxpayer or an exposure to documentation penalties.

“Where the documentation meets the requirements and is timely submitted, the taxpayer could be exempted from tax penalties or subject to a lower penalty rate if a transfer pricing adjustment is made and sustained.”, OECD Transfer Pricing Guidelines 2022, Chapter V, paragraph 5.43

Pillar Two: How the 15% ETR Floor Interacts with IP Holding Structures

The OECD/G20 Pillar Two framework, implemented through the Global Anti-Base Erosion (GloBE) Model Rules, applies a 15% global minimum effective tax rate at the jurisdictional level for MNE groups with consolidated annual revenue above EUR 750 million. As of the beginning of 2025, the GloBE rules are in force in over 50 jurisdictions, including all major EU member states following the EU Pillar Two Directive.

For iGaming groups with IP holding structures in low-rate jurisdictions, Pillar Two operates as a structural floor. Where an IP holdco in a jurisdiction with an effective tax rate below 15% retains royalty income, the group’s ultimate parent jurisdiction (or an intermediate parent) must collect a top-up tax under the Income Inclusion Rule to bring the jurisdictional ETR to 15%. Alternatively, where the low-tax jurisdiction has enacted a Qualifying Domestic Minimum Top-Up Tax (QDMTT), that jurisdiction collects the additional tax locally. Curaçao, notably, submitted a draft National Ordinance on Minimum Tax 2024 to its parliament in December 2025, implementing the Pillar Two GloBE rules with an intended retroactive application date, signalling that even historically favourable offshore jurisdictions are now moving within the minimum tax perimeter.

The substance-based income exclusion within GloBE provides a limited carve-out: a fixed return on payroll costs and the carrying value of tangible assets is excluded from the top-up tax calculation. For iGaming IP holdcos, which are typically asset-light and employ small teams, this carve-out is likely to be modest relative to the royalty income retained. Groups that have sized the tax benefit of their IP holding structure on the assumption of a zero or near-zero ETR in the holdco jurisdiction must remodel their effective group tax rate under Pillar Two assumptions.

Pillar Two does not render IP holding structures commercially irrational. It does, however, reduce the net tax differential between holding IP in a low-rate jurisdiction versus a mid-rate jurisdiction, and it places a premium on having genuine substance at the holdco level. The substance-based carve-out rewards payroll and tangible asset investment, meaning that IP holdcos with real DEMPE teams benefit from a higher exclusion amount and a lower top-up tax exposure.

Practical Obligations by Structure Type

Three distinct structure types appear with regularity in iGaming group architectures, each carrying a distinct transfer pricing compliance profile.

Platform IP licensed down to operating entities. The IP holdco owns the gaming software and licences it to one or more B2C operators within the group, charging a royalty expressed as a percentage of net gaming revenue or gross gaming yield. The arm’s length rate must reflect the genuine value contributed by the holdco’s DEMPE functions versus the value contributed by the operating entity’s local market activities. Where the operating entity bears significant player acquisition costs, maintains the local licence, manages customer support and responsible gambling obligations, and assumes regulatory enforcement risk, a portion of the overall profit pool is attributable to those functions and cannot be attributed to the IP holdco via the royalty. In practice, a royalty in the range of 15-25% of net gaming revenue might be defensible for a platform with genuine unique value and a holdco with real substance, but the specific rate requires a documented comparable or profit split analysis.

Brand royalties from locally licensed operators. Where a group brand (trade name, trade mark) is owned by a holding entity and licensed to operating subsidiaries, the royalty must reflect the genuine standalone value of the brand contribution to the operating entity’s revenue. OECD TP Guidelines Annex I to Chapter VI, Example 12, addresses the scenario of a locally licensed distributor building brand value through marketing expenditure: where the operating entity invests in building the brand in its market and has not received compensation for that contribution, imposing a royalty that eliminates its profit margin may not be consistent with the arm’s length principle. Groups that require local operating entities to fund marketing while also charging them a brand royalty must ensure that either the royalty rate reflects the operating entity’s marketing contribution, or the operating entity is separately compensated for brand-building expenditure that benefits the holdco.

B2B content supply arrangements. Game developers and aggregators supplying content to operating entities under intercompany licences face the same DEMPE analysis. The content developer must demonstrate that it genuinely develops, maintains, and controls the game content to justify retaining the net royalty income after compensating operating entities for distribution and localisation functions. Where a content supplier holds game mathematics in an IP holdco but outsources actual development to studios in other jurisdictions, the arm’s length analysis must allocate development returns to the studio entities and marketing returns to entities performing those functions.

EU Enforcement Trends

Transfer pricing enforcement targeting iGaming royalty structures has intensified across EU markets. HMRC in the United Kingdom has historically been among the most active transfer pricing authorities for gaming groups, reflecting the size of the UK market and the concentration of large operators with UKGC remote operating licences. Germany’s Bundeszentralamt für Steuern (BZSt) and Sweden’s Skatteverket have similarly demonstrated capacity to challenge intercompany royalty rates where the operating subsidiary’s effective rate is materially suppressed relative to what an independent distributor would retain.

The EU’s Anti-Tax Avoidance Directives (ATAD I and II), implemented across all member states, contain hybrid mismatch rules, controlled foreign company rules, and interest limitation provisions that interact directly with iGaming IP structures. Where royalty payments to a low-tax holdco create a deduction in a high-rate operating jurisdiction without a corresponding inclusion of taxable income in the holdco jurisdiction at the same effective rate, hybrid mismatch rules may deny the deduction entirely. Compliance teams managing cross-border royalty flows must map each payment against the ATAD implementation in the relevant operating jurisdiction.

For operators licensed with the MGA, Malta’s participation exemption and the shareholder refund mechanism have historically produced effective tax rates for non-resident shareholders that fall significantly below the nominal 35% corporate rate. Under Pillar Two, large Malta-licensed groups must ensure that the jurisdictional ETR calculation for Malta reflects the actual tax paid rather than the nominal rate. The MGA’s own licensing documentation does not address Pillar Two interaction, and groups must manage that analysis independently of their gaming regulatory obligations. Operators comparing the total cost of an UKGC licence against an MGA licence in 2026 must now factor Pillar Two top-up tax potential into the jurisdictional cost modelling for Malta-based IP holding structures.

For groups operating under newer regulatory frameworks, including Curaçao’s post-LOK regime, the Pillar Two trajectory is particularly relevant. Curaçao’s transition to the new LOK framework in December 2024, and the subsequent submission of the National Ordinance on Minimum Tax 2024 to its parliament, signals a structural shift away from the zero-effective-tax IP holding model that characterised the pre-LOK environment.

Advance Pricing Agreements as a Risk Management Tool

The most structurally sound risk management tool available to iGaming groups with significant intercompany IP transactions is a bilateral or multilateral APA. An APA agreed in advance between the competent authorities of the IP holdco jurisdiction and the operating jurisdiction fixes the arm’s length price for covered transactions over the agreed period. OECD TP Guidelines Annex II to Chapter VI confirms that an APA covering an HTVI transfer prevents the application of the HTVI ex post adjustment approach for the period in question. A bilateral APA also provides protection against double taxation where both jurisdictions are bound by the agreed pricing.

The APA process is resource-intensive. It requires submission of a detailed functional analysis, economic analysis, and proposed pricing methodology to each competent authority, followed by a negotiation period that can take two to four years for complex structures. Groups with annual intercompany royalty flows above EUR 20-30 million and HTVI-category assets should assess the cost-benefit of APA coverage against the audit exposure the structure carries without it. In practice, groups approaching an IP restructuring, including a migration of IP ownership to a new holdco jurisdiction, should initiate APA discussions before completing the transfer rather than after.

Key Resources

OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (January 2022 edition). The authoritative primary source for the arm’s length principle, DEMPE analysis, HTVI guidance, and three-tier documentation requirements. Published by the OECD at oecd.org.

OECD Guidance on Transfer Pricing Aspects of Intangibles (BEPS Actions 8-10, 2014). The foundational document introducing the revised Chapter VI framework and the DEMPE concept. Incorporated in full into the 2022 edition of the Guidelines.

OECD Minimum Tax Implementation Handbook (Pillar Two). The operative guidance for implementing the GloBE rules, including the substance-based income exclusion mechanics relevant to IP holding structures. Published by the OECD at oecd.org.

OECD/G20 BEPS Action 13 Final Report: Transfer Pricing Documentation and Country-by-Country Reporting. Sets out the three-tier documentation standard, master file and local file content requirements, and CbC reporting framework. Incorporated into Chapter V of the 2022 Guidelines.

This article addresses the application of international transfer pricing standards to iGaming group structures. It does not constitute legal or tax advice. Operators should engage qualified transfer pricing counsel in each relevant jurisdiction before implementing or restructuring IP holding arrangements.