In determining this point, where the range comprises results of relatively equal and high reliability, it could be argued that any point in the range satisfies the arm’s length principle. Where comparability defects remain as discussed at paragraph 3.57, it may be appropriate to use measures of central tendency to determine this point (for instance the median, the mean or weighted averages, etc., depending on the specific characteristics of the data set), in order to minimise the risk of error due to unknown or unquantifiable remaining comparability defects.
TPG2017 Chapter III paragraph 3.62
Category: A. Performing a comparability analysis, OECD Transfer Pricing Guidelines (2017), TPG2017 Chapter III: Comparability Analysis | Tag: Arm’s length range, Central tendency, Comparability analysis, Comparability defects, Interquartile range, Mean, Mean Weighted averages, Median, Weighted averages« Prev | Next »
TPG2017 Chapter III paragraph 3.57
It may also be the case that, while every effort has been made to exclude points that have a lesser degree of comparability, what is arrived...TPG2017 Chapter III paragraph 3.65
Generally speaking, a loss-making uncontrolled transaction should trigger further investigation in order to establish whether or not it can be a comparable. Circumstances in which loss-making...TPG2017 Chapter III paragraph 3.64
An independent enterprise would not continue loss-generating activities unless it had reasonable expectations of future profits. See paragraphs 1.129-1.131. Simple or low risk functions in particular...TPG2017 Chapter III paragraph 3.63
Extreme results might consist of losses or unusually high profits. Extreme results can affect the financial indicators that are looked at in the chosen method (e.g....Spain releases note on arm’s length range and benchmarking.
On 25 February 2021, a note was released by the Spanish Tax Agency on number of practical issues relating to application of the arm’s-length range. The...
TP case laws
Spain vs Ikea, March 2019, Audiencia Nacional (TEAC), Case No SAN 1072/2019