Transfer Pricing

Economic Benchmarking

Economic Benchmarking

Economic benchmarking analysis is a technique for establishing the arm's length profits of a controlled entity by reference to the profitability of one or more uncontrolled entities determined to be comparable to the controlled entity of interest with respect to functions performed, assets employed, and risks taken.

Benchmarking analyses are typically used to calculate the routine profits earned by parties engaged in controlled transactions and, by extension, to determine the "non-routine" residual profits attributable to profit drivers, which cannot be benchmarked and are unique to the controlled transaction at hand.

Benchmarking analyses are commonly performed to determine arm's length profits for routine manufacturing, distribution, or service functions.

Often, to improve the reliability of profit benchmarks derived from comparables data, certain adjustments are made to the financial data of the comparables and/or of the controlled parties in question.

NERA's documentation for a benchmarking analysis typically takes the form of a comprehensive report, providing a clear audit trail and a sourcing of information used to justify the selection and further analysis of the comparables.

Manufacturing Evaluations                                                       

Benchmarking of manufacturing activities is commonly performed in the context of applying profit-based methods for planning and compliance purposes, supply chain restructuring, and intangibles and business valuation. NERA's approach to manufacturing activities benchmarking includes a variety of reliability-enhancing adjustments and comprehensive documentation capabilities, including treatments suitable for different transactional contexts such as contract manufacturing/tolling and limited risk supply arrangements.

Distribution Evaluations

Benchmarking of distribution activities is commonly performed in the context of applying profit-based methods for compliance and planning purposes, supply chain restructuring, and valuation studies. NERA's approach to distribution activities benchmarking includes a variety of reliability-enhancing adjustments and comprehensive documentation capabilities, including treatments suitable for different transactional contexts such as buy-sell, drop shipment, and commissionaire arrangements.

Services Evaluations                                                            

Typical intercompany services subject to benchmarking studies include contract activities for intangibles development such as research and development, engineering, marketing, financial services such as loans and guarantee contracts, and other miscellaneous management and administrative activities whose benefits are shared by affiliates in different taxing jurisdictions. To facilitate benchmarking analysis of services, NERA has created a proprietary database of comparables for a variety of service activities and transactional contexts.

Name Title Location Phone Email
Dr. Harlow Higinbotham Managing Director Chicago +1 312 573 2803
+86 21 6103 5544
+86 10 6533 4395
harlow.higinbotham@nera.com
Dr. Emmanuel Llinares Managing Director
Head of Global Transfer Pricing
Paris
Geneva
London
+33 1 70 75 01 93
+41 22 819 94 94
+44 20 7659 8650
emmanuel.llinares@nera.com
Sébastien Gonnet Director Paris
Geneva
+ 33 1 45 02 30 00
+41 22 819 94 94
sebastien.gonnet@nera.com
Dr. Stuart L. Harshbarger Director White Plains, NY +1 914 448 4185 stuart.harshbarger@nera.com
Nihan Mert-Beydilli Associate Director Los Angeles +1 213 346 3035 nihan.mert.beydilli@nera.com
Yuko Saito Associate Director New York City
Tokyo
+1 212 345 1963
+81 3 3500 3378
yuko.saito@nera.com
Dr. Vladimir Starkov Associate Director Chicago +1 312 573 2806 vladimir.starkov@nera.com
Tom Braukmann Principal Frankfurt +49 69 710 447 511 tom.braukmann@nera.com
Dr. Alexander Voegele Affiliated Consultant Frankfurt +49 69 710 447 501 alexander.voegele.affiliate@nera.com
Title Type Author
Comments on OECD Discussion Draft on the Revised Guidance on Profit Splits Regulatory Filing Emmanuel Llinares, Harlow Higinbotham, Nihan Mert-Beydilli, and Vladimir Starkov
Apple and the CCCTB: Can the European Commission Have Both? Published Article By Dr. Emmanuel Llinares and Guillaume Madelpuech
Economic Analysis for Developing Countries—Comments on the IMF, OECD, UN, and World B... Regulatory Filing By Dr. Vladimir Starkov, Sébastien Gonnet, and Guillaume Madelpuech
Field Tax Audits in Germany Published Article By Dr. Alexander Voegele and Philip de Homont
The take on comparables: A French perspective Published Article By Guillaume Madelpuech
Comments on the OECD Public Discussion Draft on the Attribution of Profits to Permane... Regulatory Filing By. Pim Fris and Guillaume Madelpuech
Separating intangible value by surveys Published Article By Philip de Homont and Alexander Voegele
Risks Redefined in Transfer Pricing Post-BEPS Book By Sébastien Gonnet
Discussion of the Amendments to Chapter IX of the OECD Transfer Pricing Guidelines on... Memo By Pim Fris and Guillaume Madelpuech
Practical treatment of transfer pricing adjustments Published Article By Philip de Homont and Alexander Voegele