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PrintThe most applied (and most preferred) methods are the comparable uncontrolled price method, the resale price method and the cost plus method.
The aforementioned methods are described in detail in published policy statements.
Other methods, so called “transactional profit methods” (i.e. the profit-split method and the transactional net margin method or TNMM) may be used as well but these methods are considered more or less as methods of last resort.
The policy gives concrete guidelines for determining the best method in a concrete situation. Sometimes one method is considered better than another, but in practise a transfer pricing discussion always bears both the element of price comparison and statistical calculation.
The prices charged by a company may be fully in line with normal market prices, but if conditions of the transaction are such that the company cannot be expect to make a normal profit margin, the price may still have to be adjusted (or alternatively expenses charged by group companies may have to be reduced).
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