Benchmarking and economic analysis

Benchmarking is often the evidence that determines whether a transfer pricing position can be defended. We prepare economic analyses that are technically sound, transparent and adapted to the transaction, industry and jurisdictions involved.

Why this matters

Tax authorities increasingly challenge search strategies, comparability criteria, comparability adjustments, loss-making comparables, tested-party selection, profit level indicators and the link between the benchmark and the actual pricing mechanism. A robust benchmarking study requires technical judgement, reliable data and a clear explanation of how the analysis supports the intercompany price.

How we help

• Select the appropriate method: assess whether TNMM, CUP, cost plus, resale price, profit split or another method is most appropriate for the transaction.
• Design the search strategy: define geographic scope, industry criteria, functional comparability, independence criteria and quantitative screens.
• Use recognised databases: support analyses with commercial databases and sources such as Moody’s TP Catalyst, Bloomberg, S&P Capital IQ and RoyaltyRange where appropriate.
• Analyse comparability: review business descriptions, functional profile, financial results and the reliability of proposed comparables.
• Prepare financial analyses: calculate arm’s length ranges, test results, assess year-end adjustments and support financial transactions or royalty pricing.
• Document the analysis: prepare benchmarking reports that explain the methodology, assumptions and conclusions in an audit-ready format.

Typical deliverables

• Manufacturing, distribution and service benchmarks
• Benchmark refreshes and roll-forward analyses
• Loan, guarantee, cash pooling and financial transaction analyses
• Royalty benchmarks and IP-related economic support
• Method selection and comparability analyses
• Economic analyses and benchmarking reports supporting local files, transfer pricing reports or APA submissions

Typical triggers

• Outdated benchmarks in existing documentation
• New intercompany transactions or new markets
• Belgian or foreign tax authority questions
• Need to support year-end true-ups
• Business restructuring or new operating model
• APA, ruling or dispute-prevention project