Transfer Pricing Analysis

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Transfer Pricing Analysis Calculation Rates

Five Transfer Pricing methods outlined in the Organization for Economic Co-operation and Development (OECD) 2017 Transfer Pricing Guidelines are transactional and profit based.

The transactional methods include:

  • Comparable Uncontrolled Price (CUP)
  • Resale Price Method
  • Cost Plus Method

The profit methods include:

  • Net Margin Method
  • Profit Split Method

The Comparable Uncontrolled Price (CUP) method is often used to measure the transfer price payment connected with intellectual property and intangible assets.  This method compares similar arm’s length market transactions between unrelated parties to controlled transactions between related parties.

The transfer price payment often takes the form of a royalty.  Royalty payments can be benchmarked using market based unrelated party licensing agreements.  While royalty payments can take many forms, royalty rates applied to a royalty base of sales or profit are common.  We have three ways to access and begin your royalty rates analysis depending upon your purpose and need for detail.

  1. Pre-Built Royalty Rate Reports are constructed using Artificial Intelligence to organize the most relevant technology or trademarks into collections of similar license agreements.
  2. Industry Overviews present license party profiles and a more in-depth royalty rate analysis of benchmark measures and high-level deal terms by licensee product.
  3. Annual Summary includes general benchmark measures include average, median, maximum, minimum and the interquartile range for 15 different industries.

Read more about these benchmark resources here.