Transfer Pricing

Intercompany Service Fee Arrangements

NERA has developed a robust documentation framework for intercompany services that has been used successfully worldwide. This framework consists of a structured approach to valuing arm’s length service fees.

NERA's approach to documenting intercompany services begins with a thorough understanding of the functions and costs associated with the clients' relevant business units.

• After performing a robust gathering of facts, we group costs into distinct service categories.
• We independently review each service category to determine which costs are related to stewardship activities, routine activities, and non-routine services.
• Service costs are then allocated to determine what portion of costs in each category is chargeable to affiliates. 
• Arm's length fees for non-routine services are calculated rigorously through an economic benchmarking process that is expansive and comprehensive.
• Finally, we integrate various elements of the structured approach to calculate total service fee charges for related parties.

NERA's structured approach to documenting intercompany service charges leads to increased defensibility under audit because all service fee charges can be traced back to their original source data.

• We use routine accounting data that is created and maintained during the ordinary course of business, enabling our clients to easily update and maintain this framework in-house.
• We rely upon information that is in the public domain and only employ analytical tests that are verifiable within the delivered documentation to provide our clients with work that has lasting value.