When applying a cost plus, resale price or transactional net margin method as described in Chapter II, it is necessary to choose the party to the transaction for which a financial indicator (mark-up on costs, gross margin, or net profit indicator) is tested. The choice of the tested party should be consistent with the functional analysis of the transaction. As a general rule, the tested party is the one to which a transfer pricing method can be applied in the most reliable manner and for which the most reliable comparables can be found, i.e. it will most often be the one that has the less complex functional analysis.
TPG2017 Chapter III paragraph 3.18
Category: A. Performing a comparability analysis, OECD Transfer Pricing Guidelines (2017), TPG2017 Chapter III: Comparability Analysis | Tag: Comparability analysis, Less complex party, Tested party« Prev | Next »
TPG2017 Chapter II paragraph 2.69
Another practical strength of the transactional net margin method is that, as with any one-sided method, it is necessary to examine a financial indicator for only...TPG2017 Chapter III paragraph 3.22
Where the most appropriate transfer pricing method in the circumstances of the case, determined following the guidance at paragraphs 2.1-2.12, is a one-sided method, financial information...TPG2017 Chapter III paragraph 3.21
Where the most appropriate transfer pricing method in the circumstances of the case, determined following the guidance at paragraphs 2.1-2.12, is a transactional profit split, financial...TPG2017 Chapter III paragraph 3.20
In order to select and apply the most appropriate transfer pricing method to the circumstances of the case, information is needed on the comparability factors in...TPG2017 Chapter III paragraph 3.19
This can be illustrated as follows. Assume that company A manufactures two types of products, P1 and P2, that it sells to company B, an associated...
TP case laws
Denmark vs. Danish Production A/S, Feb 2018, Tax Tribunal, SKM2018.62.LSR