https://resources.comp-press.com/categories/tp-basics/Recent content in TP Basics on CompPress | Transfer Pricing ResourcesHugoen-usFri, 05 Jun 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-framework-delineation/Wed, 24 Sep 2025 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-framework-delineation/<div class="art-series"><p><strong>Related reading (Comp-Press resources page):</strong> This is the anchor article in a cluster on intercompany loans. It is supported by <strong>Debt Capacity and Borrower Analysis: How Much Debt Is Arm&rsquo;s Length?</strong>, <strong>Credit Rating for Intercompany Loans: Standalone Ratings, Implicit Support, and the Rating Build</strong>, and <strong>Interest Rate Benchmarking for Intercompany Loans: CUP Approaches and Yield Construction</strong>. The full workflow is drawn together in the flagship guide <strong>How to Run an Intercompany Loan Benchmarking Analysis: A Step-by-Step Guide</strong>.</p>https://resources.comp-press.com/articles/transfer-pricing-far-analysis-in-transfer-pricing/Fri, 05 Jun 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-far-analysis-in-transfer-pricing/<p>Every transfer pricing study starts with a functional analysis. The industry calls it FAR: functions, assets, risks. It answers the question that everything else depends on: what does each entity in the transaction actually do, what does it use, and what does it risk?</p> <p>The characterization that comes out of the FAR analysis determines the transfer pricing method, the profit level indicator, and the benchmarking search criteria. A FAR that says &ldquo;limited-risk service provider&rdquo; leads to TNMM/CPM with <a href="https://resources.comp-press.com/articles/net-cost-plus-markup/">net cost plus markup</a>. A FAR that says &ldquo;full-risk entrepreneur&rdquo; leads to a completely different analysis. The rest of the study follows from this step. If it is wrong, everything built on top of it is wrong too.</p>https://resources.comp-press.com/articles/transfer-pricing-net-cost-plus-markup-in-transfer-pricing/Fri, 05 Jun 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-net-cost-plus-markup-in-transfer-pricing/<p>If your multinational group has a subsidiary providing services to a related entity, the arm&rsquo;s length price for that service is almost certainly benchmarked using net cost plus markup. Software engineering, contract R&amp;D, administrative support, sales and marketing, procurement: the tested party&rsquo;s total costs are the base, and the markup on top is what gets benchmarked.</p> <p>The concept is simple. A US subsidiary incurs $10 million in total costs providing software engineering services to its German parent. It charges $10.7 million. The markup is 7%. Whether that 7% is arm&rsquo;s length depends on what comparable independent companies earn for similar services.</p>https://resources.comp-press.com/articles/transfer-pricing-benchmarking-analysis/Fri, 05 Jun 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-benchmarking-analysis/<p>The benchmarking analysis is the part of a transfer pricing study that most people think of as &ldquo;the study.&rdquo; Finding comparable companies, computing their profitability, checking whether the tested party&rsquo;s intercompany pricing falls in the same range.</p> <p>It is also where the most money is wasted. Not because the math is hard, but because the industry has a structural problem: comparable searches are expensive to run, easy to do poorly, and difficult to evaluate from the outside. A search that produces 15 comparables and a clean interquartile range looks professional on paper. Whether those 15 companies actually resemble the tested party is a question that only gets answered on audit. By then, it is expensive to fix.</p>https://resources.comp-press.com/articles/transfer-pricing-transfer-pricing-methods-explained/Fri, 05 Jun 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-transfer-pricing-methods-explained/<p>There are five accepted transfer pricing methods. Three are traditional transaction methods that compare prices or gross margins. Two are transactional profit methods that compare net profitability. Every transfer pricing textbook covers all five at equal length. This article does not, because in practice, they are not equally important.</p> <p>TNMM/CPM is the method applied in the vast majority of benchmarking studies for routine intercompany transactions: services, distribution, contract manufacturing. If your company has a subsidiary providing services to a related entity, TNMM/CPM is almost certainly the right method. The question is not which method to use. The question is which profit level indicator and which comparables.</p>https://resources.comp-press.com/articles/transfer-pricing-what-is-a-transfer-pricing-study/Fri, 05 Jun 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-what-is-a-transfer-pricing-study/<p>A transfer pricing study, sometimes called transfer pricing documentation, analyzes whether the prices charged between related entities within a multinational group are consistent with the arm&rsquo;s length principle. The term covers everything from a single-entity benchmarking report to a full master file and local file package across dozens of jurisdictions.</p> <p>Most practitioners know what a study is. The more useful questions are: what separates a study that holds up on audit from one that does not, what does the process actually look like, and how much should it cost? That is what this article covers.</p>https://resources.comp-press.com/articles/transfer-pricing-benchmarking-study/Thu, 09 Apr 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-benchmarking-study/<h2 class="art-sec" id="why-benchmarking-sits-at-the-center-of-transfer-pricing-practice"><span class="art-sec-t">Why Benchmarking Sits at the Center of Transfer Pricing Practice</span> </h2><p>Both the OECD Transfer Pricing Guidelines and the United States Section 482 regulations recognize five principal pricing methods, but in practice most analyses rely on one: the Transactional Net Margin Method (TNMM) under the OECD framework, or its US analogue the Comparable Profits Method (CPM). These methods compare the operating margin or another profit-level indicator of the tested party with the corresponding margins earned by independent comparable companies. The benchmarking study is the analytical apparatus that produces those comparable margins.</p>https://resources.comp-press.com/articles/transfer-pricing-penalties/Wed, 08 Apr 2026 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-penalties/<p>A useful distinction often gets lost in transfer pricing discussions: the risk that pricing is wrong and the risk that documentation is inadequate are two separate exposures, and they interact. In the United States, documentation is the principal defense against penalties when the IRS proposes a pricing adjustment. Without adequate documentation, a §6662(e) penalty can apply on top of the tax owed on the adjustment, materially increasing the cost. With adequate documentation, the same adjustment may produce additional tax but no penalty. In some other jurisdictions, separate documentation-failure penalties apply regardless of whether pricing is ultimately adjusted. This article walks through the mechanics of the US penalty regime under IRC Section 6662(e), notes how other major jurisdictions approach the question, and provides a self-assessment framework and a worked example so a finance or tax leader can produce a rough estimate of exposure for their own group.</p>https://resources.comp-press.com/articles/transfer-pricing-comparability-in-practice-aggregation-and-adjustments/Wed, 27 Aug 2025 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-comparability-in-practice-aggregation-and-adjustments/<div class="art-series"><p><strong>Related reading on the Comp-Press resources page</strong></p> <p>This article is part of a series on comparability. It follows <strong>Comparability Analysis: The Five Factors and the Economics of an Inference</strong>, <strong>Selecting the Tested Party: A Structured Framework</strong>, and <strong>Selecting the Profit Level Indicator</strong>, and it takes up the measurement problems that arise once the tested party, the comparable set, and the profit level indicator are fixed. For the surrounding search workflow, see the <strong>Benchmarking Analysis in Transfer Pricing</strong> guide.</p>https://resources.comp-press.com/articles/transfer-pricing-selecting-the-profit-level-indicator/Wed, 06 Aug 2025 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-selecting-the-profit-level-indicator/<div class="art-series"><p><strong>Related reading on the Comp-Press resources page</strong></p> <p>This article is part of a series on comparability. It follows <strong>Selecting the Tested Party: A Structured Framework</strong>, which establishes that a candidate can only be tested if a reliable, consistently measurable indicator exists for it, and it is a companion to <strong>Comparability Analysis: The Five Factors and the Economics of an Inference</strong> and <strong>Comparability in Practice: Aggregation and Adjustments</strong>. For the surrounding search workflow, see the <strong>Benchmarking Analysis in Transfer Pricing</strong> guide.</p>https://resources.comp-press.com/articles/transfer-pricing-selecting-the-tested-party/Wed, 23 Jul 2025 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-selecting-the-tested-party/<div class="art-series"><p><strong>Related reading on the Comp-Press resources page</strong></p> <p>This article is part of a series on comparability. It develops the profit-dependence idea introduced in <strong>Comparability Analysis: The Five Factors and the Economics of an Inference</strong> into a full method for choosing the tested party, and it is a companion to <strong>Selecting the Profit Level Indicator</strong> and <strong>Comparability in Practice: Aggregation and Adjustments</strong>. For the underlying screening workflow, see the <strong>Benchmarking Analysis in Transfer Pricing</strong> guide.</p>https://resources.comp-press.com/articles/transfer-pricing-comparability-analysis-the-five-factors/Wed, 09 Jul 2025 00:00:00 +0000https://resources.comp-press.com/articles/transfer-pricing-comparability-analysis-the-five-factors/<div class="art-series"><p><strong>Related reading on the Comp-Press resources page</strong></p> <p>This article opens a series on comparability. Its companions are <strong>Selecting the Tested Party: A Structured Framework</strong>, <strong>Comparability in Practice: Aggregation and Adjustments</strong>, and <strong>Selecting the Profit Level Indicator</strong>. It also builds on the foundational treatment in the <strong>Benchmarking Analysis in Transfer Pricing</strong> guide, which introduces the five factors and the function-first screen at a working level. This piece develops the economics beneath them.</p>