Executive answer
DEMPE summarizes five groups of functions associated with intangibles: development, enhancement, maintenance, protection and exploitation. The map identifies entities and people contributing to value, decision and risk control, resources and funding. It is not a profit-allocation formula or a rule that disregards contracts.
Legal ownership remains important because it defines rights and licensing or transfer capacity. It does not alone guarantee all economic returns if other entities perform and control important functions without appropriate remuneration. Conversely, carrying out technical tasks does not automatically confer ownership or residual return; control, risk, funding, assets and alternatives must be examined.
In Mexico, DEMPE is a technical framework in the OECD Guidelines that may support interpretation within the terms of Mexican law. It is not a standalone statutory article. A tax conclusion must connect specific transactions, the arm’s-length standard, documentation, agreements and facts.
What each function covers
| Function | Central question | Examples | Evidence |
|---|---|---|---|
| Development | Who creates the intangible? | R&D, code, formula, initial brand | projects, staff, decisions |
| Enhancement | Who increases capability or value? | versions, adaptation, expansion | roadmap, budget, tests |
| Maintenance | Who preserves usefulness? | updates, renewal, support | tickets, releases, costs |
| Protection | Who registers and defends? | patents, trademarks, litigation, security | registrations, counsel, committees |
| Exploitation | Who turns it into returns? | licensing, production, sales, marketing | contracts, sales, campaigns |
Categories overlap. A team may develop and maintain; a campaign may exploit and enhance a brand. The aim is not forcing every activity into one box, but explaining contribution and decision.
Start with the intangible
Do not map DEMPE over abstract “IP.” Identify the trademark, patent, code, algorithm, know-how, database, process, contractual right or other asset. Define stage, territory, users and legal chain. One product may combine assets with different owners and functions.
Document history: initiator, funding, transfers, registrations, acquisitions and changes. Determine whether an intangible exists for the analysis even if absent from the balance sheet. Not every advantage is separable or transferable, but it can affect comparability.
Delineation must reflect conduct. A contract assigning development to the parent conflicts with repositories and Mexican decision-making if the local team designs the product. Renaming functions does not solve the contradiction; remuneration and agreements need review.
Tasks, decisions and control
A task list is insufficient. For each economically significant risk, identify who decides to assume it, responds, can mitigate it, uses which information and has financial capacity. Formal approval of another party’s prepared decision may not equal control.
Interviews should examine cases: cancelled project, overrun, rejected registration, vulnerability, litigation or market change. Who decided and bore consequences? Minutes, budgets and authority matrices validate answers.
Separate outsourced execution from control. An entity can hire independent researchers and retain control by setting objectives, selecting, monitoring and deciding. Another may employ staff but follow detailed instructions as a remunerated provider.
Funding
Funding development deserves a return consistent with risk and control, but not necessarily all returns. Analyze funding source, commitment, decisions, loss capacity and terms. A capital provider without risk control may warrant a limited return under the delineation.
Reconcile budget and actual spend. Identify reimbursements, cost contributions, capitalization and services. Follow the cash; a holding company may transfer funds while another entity makes decisions. The bank account does not settle the analysis.
The agreement should address overruns, cancellation and success. If conduct diverges, document amendment and consequences. A failed project also reveals who bore risk.
Operating DEMPE map
| Activity | Performs | Decides/controls | Funds | Risk | Evidence | Current remuneration |
|---|---|---|---|---|---|---|
| Roadmap | market | |||||
| Research | technical failure | |||||
| Development | time/cost | |||||
| Testing | quality | |||||
| Release | product | |||||
| Registration | protection | |||||
| Defense | infringement | |||||
| Marketing | demand | |||||
| Licensing | credit/market | |||||
| Support | obsolescence |
Complete it with people and committees, not just entities. Link each row to records. The final column detects unpaid contributions or duplicate remuneration.
From functions to transactions
The map does not allocate profit directly. First identify transactions: R&D services, license, transfer, funding, cost contribution, manufacturing, marketing or distribution. Delineate each and select the method on facts.
An entity performing routine development under another’s control may earn cost plus if comparables and risks support it. An entity controlling risks and making unique contributions may require a different participation. The “contract R&D” label must be tested against conduct.
Review royalties. If Mexico pays for technology and also develops enhancements, determine ownership and remuneration for improvements. If its distribution margin purportedly pays for market development, test adequacy. Prevent double payment and uncompensated work.
If the intellectual-property chart shows entities but no people, decisions or risks, a DEMPE map can reveal where value is actually created and controlled.
Evidence across the lifecycle
At idea and approval: business case, roadmap, committee and budget. During development: repositories, experiments, vendors, time, milestones and changes. At launch: tests, authorization, campaigns and pricing. During maintenance: releases, incidents, quality and renewal. For protection: registrations, monitoring, litigation and security. For exploitation: licenses, users, sales and commercial decisions.
Do not retain only successes. Cancellations and deviations demonstrate risk and control. Version and date records. Distinguish year-end narratives from contemporaneous evidence.
Interviews complement files. Record attendees and examples. Compare technical, finance, legal and business perspectives because each sees only part.
Legal title and registrations
Build the chain of title: employee or vendor creation, assignments, registrations, acquisitions and licenses. Review territories. A trademark registration does not prove software ownership; a development invoice does not prove assignment.
Align employment and vendor contracts with policies. Identify open-source, third-party rights and restrictions. For data, assess access, use and protection rights. Legal weakness can affect value and comparables.
For transfers, document asset, date, rights, valuation and subsequent conduct. A later license does not cure a poorly delineated transfer.
Common risks
- Title holder without people receives all returns.
- Mexican team decides but is described as routine.
- Agreements conflict with repositories and committees.
- Funder lacks capacity or control.
- Local enhancements lack owner or remuneration.
- Several entities charge for the same contribution.
- Lawyers prepare DEMPE without technical interviews.
- Entity matrix lacks people and dates.
- DEMPE is used as an automatic percentage.
- Losses, cancellations and obsolescence are ignored.
A signal does not resolve the case. It identifies where facts and exposure need analysis.
Business changes
Update the map after acquisitions, team moves, leader changes, R&D centralization, system migrations, launches, registration transfers or restructuring. An annual static map can become obsolete quickly.
Compare before and after. Which decisions, personnel, rights and opportunities moved? A contractual change without operational change may not transfer value. Operational change without contract creates inconsistency.
Assess compensation for transfers or terminations where relevant. Do not assume every restructuring creates an exit charge or none does.
Mapping workshop
Prepare documents and a preliminary inventory. Bring legal, innovation, product, marketing, finance and tax together. Walk through the lifecycle with examples. Record disagreements and missing evidence without forcing consensus in interviews.
Then validate with data and contracts, classify risks and connect transactions and remuneration. Deliver the map, narrative, gaps and actions. Assign owners and dates.
The workshop should be repeatable. Use a stable taxonomy while allowing asset-specific exceptions. The output is a decision tool, not merely an appendix.
Committee questions
- Which intangibles generate material value?
- Who owns each right and in which territory?
- Who proposes, approves and cancels projects?
- Who controls cost, quality and obsolescence?
- Who funds and has capacity?
- Which teams execute?
- Who enhances and protects?
- How does Mexico exploit the asset?
- What does each contributor receive?
- Does remuneration match functions and risks?
- Do agreement, accounting and conduct align?
- Which change triggers an update?
Example: a platform developed in three countries
The parent legally owns a platform. A European team defines architecture; Mexico develops modules and chooses priorities for Latin America; another center operates infrastructure and security. The parent funds the overall budget and approves large acquisitions. Calling everyone “support” does not explain value creation.
Open projects and risks. Europe may control technical integrity; Mexico may control regional requirements and the development risk for its modules; the operations center may perform maintenance under service levels. Parent financial approval must be compared with who decides to continue, cancel or modify work.
Then identify transactions: development services, license, maintenance and perhaps market contributions. The method may differ by transaction. Profit is not divided mechanically by programmers. Examine control, unique contributions, alternatives and reliable data.
Reconcile DEMPE with financial information
Cross people and activities to payroll, cost centers, capitalization, vendors and assets. If the map assigns development to Mexico while its accounts show only selling costs, investigate recharge, personnel booked elsewhere or an inaccurate narrative. If the title holder receives royalties, connect income with spend and decisions.
Build a project bridge showing budget, actual spend, funder, billing and return. Not every cost creates an intangible, and not every contribution is capitalized. Reconciliation explains differences rather than forcing accounting and technical concepts to match.
Evidence governance
Appoint a custodian by intangible and another by function. The first maintains legal chain and agreements; the second preserves operating evidence. Tax coordinates but should not invent facts. Review material assets twice a year and establish extraordinary triggers.
Control confidentiality and access. Technical repositories may contain secrets or personal data; the file can use indexes, extracts and controlled demonstrations. Protection should not become absence of evidence.
Quality checks
Confirm every map row has a person, date, evidence reference and current remuneration. Challenge empty “control” statements. Compare interview answers across countries. Trace a sample decision from proposal through approval, execution and consequence. Revisit disagreements rather than averaging them away. Finally, have business owners confirm facts while tax retains responsibility for the technical conclusion.
Record unresolved assumptions explicitly and assign a deadline.
Sources and cutoff
This article was verified as of August 2, 2026. Consult current Mexican Income Tax Law, the OECD country profile for Mexico and the OECD Guidelines 2022, particularly Chapter VI. DEMPE must operate within the legal and factual framework and does not replace an ownership or tax opinion.
Zugzwang’s DEMPE Mapping Workshop turns ownership, teams, decisions, funding and risks into a verifiable map connected to transactions and remuneration.