Analysis of Intra-Group Commodity Transactions

Commodity transactions typically represent the highest value flows within corporate groups and are simultaneously among the most scrutinised areas during tax audits. Our analysis provides an objective assessment confirming that the pricing applied between related parties is consistent with the arm’s length principle.

As part of the service, we prepare:
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‍1. Assessment of the nature and justification of the transaction: identification of the type of goods and the factual circumstances,evaluation of the functions performed, assets used and risks borne by the parties,optionally: confirmation that the activities were actually performed and generated value for the recipient (benefit test), analysis of potential duplication of functions within the group and “shareholder activities”.

‍2. Selection of the appropriate set of comparable data: identification of the correct pricing model (cost-plus, lump-sum, success fee, unit-based charges),verification or calculation of the actual profitability level for the selected profit level indicator,identification of the relevant data set (internal data or external databases).

‍3. Benchmarking analysis: selection of the appropriate transfer pricing method for comparability purposes (TNMM, CUP, Profit Split, Cost Plus),selection of the relevant external database where required (Amadeus, Orbis, RoyaltyRange),initial automated filtering based on criteria identified in previous steps (reducing the universe from several million to several thousand entities),narrowing the results to a set suitable for manual screening — typically around 150 entities,obtaining the final sample (from 5 to 50 entities) and determining the interquartile or full arm’s-length range.

‍4. Documentation and argumentation: preparation of a draft analysis in Word format, including appendices with financial data and calculations,preparation of conclusions for Local File or Master File documentation,exchange of comments and delivery of the final version (approx. 15 pages in Word + Excel and PDF attachments).

‍Client outcomeThe analysis not only confirms compliance with the arm’s length principle but also streamlines the pricing and settlement processes within the group, reduces tax-related risks, and prepares the organisation for potential audits.