In determining the arm’s length charge for low value-adding intra¬group services, the MNE provider of services shall apply a profit mark-up to all costs in the pool with the exception of any pass-through costs as determined under paragraphs 2.99 and 7.34. The same mark-up shall be utilised for all low value-adding services irrespective of the categories of services. The mark-up shall be equal to 5% of the relevant cost as determined in Section D.2.2. The mark-up under the simplified approach does not need to be justified by a benchmarking study. The same mark-up may be applied to low value-adding intra-group services performed by one group member solely on behalf of one other group member, the costs of which are separately identified under the guidance in paragraph 7.57. It should be noted that the low value-adding intra-group services mark-up should not, without further justification and analysis, be used as benchmark for the determination of the arm’s length price for services not within the definition of low value-adding intra-group services, nor for similar services not within the elective, simplified scheme.
Chapter VII paragraph 7.61
Category: Chapter VII: Special Considerations for Intra-Group Services, D. Low value-adding intra-group services, OECD Transfer Pricing Guidelines (2017) | Tag: Application of the simplified approach, Intra-group services, Low value-adding services (LVAS), Pool of cost, Service fee, Services« Prev | Next »