Transfer Pricing Associates

New Generation of Intangibles


The new generation of intangibles comes in many shapes and forms. Almost all of them are triggered by companies with new types of business models, with a significantly different configuration compared to its competitors.

In order to rank the uniqueness of such new generation and make a distinction vis-à-vis the more regular intangibles, the following criteria could be used:

  1. A clearer definition of non-traditional intangibles is required;
  2. Certain elements in a business model need to excluded from the definition of intangibles, e.g. certain value-drivers are not per se risk-bearing;
  3. A practical set of criteria to use in determining whether an intangibles is present in particular cases;
  4. A distinction to be made between routine and non-routine intangibles;
  5. Clear indication that only intangible assets which are protected and/or protectable and which can be legally transferred constitute genuine intangibles;

A few categories of new generation of intangibles can be identified:

New business models do create a new generation of intangibles, but also generate a new type of questions on the sustainability, i.e. economic lifetime, of such intangibles, such as:

Although the new generation of intangibles is a reflection of strong innovative powers, the economic lifetime often is no more than 1 to 2 years, depending on how smart and unique competition will be. Such short life cycles do impact the relationship between R&D cost and/or marketing spend and the – potentially superior - return on such new generation of intangibles.