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. Yves Hervé Managing Director Frankfurt +49 69 710 447 508 yves.herve@nera.com
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
Philip de Homont Director Frankfurt +49 69 710 447 502 philip.de.homont@nera.com
Dr. Niraja Srinivasan Director Washington, DC +1 202 466 9290 niraja.srinivasan@nera.com
Dr. Vladimir Starkov Director Chicago +1 312 573 2806 vladimir.starkov@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
Tom Braukmann Principal Frankfurt +49 69 710 447 511 tom.braukmann@nera.com
Alexis Jin Consultant Chicago +1 312 573 4804 alexis.jin@nera.com
Dr. Alexander Voegele Affiliated Consultant Frankfurt +49 69 710 447 501 alexander.voegele.affiliate@nera.com
Title Type Author
Transfer Pricing Solutions for Intragroup Shared Services White Paper Dr. Niraja Srinivasan and Nihan Mert-Beydilli
‘Coca-Cola’ vs. Section 482: Is It Time to Refresh the Regulatory Guidance? Published Article Dr. Harlow Higinbotham and Dr. Niraja Srinivasan
The Future of Transfer Pricing Published Article Niraja Srinivasan, et al.
Entretien de Juliette Ansart dans Dauphinews Published Article by Juliette Ansart
Going digital multinationals: Navigating economic and social imperatives in a post-pa... Published Article Niraja Srinivasan, et al.
NERA Experts Contribute Chapter to "The Future of the Profit Split Method" Book Dr. Harlow Higginbotham and Dr. Vladimir Starkov
Transfer Pricing Roundtable in Financier Worldwide. Expert QA Dr. Vladimir Starkov and Philip de Homont
Amount B: Facts and Circumstances Matter—Even for Routine Distributors Published Article Dr. Harlow Higinbotham, Dr. Niraja Srinivasan, Dr. Vladimir Starkov, and Nihan Mert-Beydilli
Dr. Yves Hervé’s Interview in Financier Worldwide Dr. Yves Hervé
Taxation of the Digital Economy: Analysing User Base Value Published Article Dr. Yves Hervé and Philip de Homont