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CAMBIO Avocat can help you justify your transfer prices through benchmarking studies
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CAMBIO Avocat carries out benchmarking studies for all types of flows: manufacturing, distribution, provision of services, licensing of intellectual property rights (royalty rates on patents and trademarks, etc.), financial benchmarking (credit rating and interest rates).
CAMBIO Avocat can update the financial results of the comparable companies identified in your benchmarking studies. The French tax authorities recommend updating the results of comparables every year and carrying out a new benchmark every three years.
Assignments involving the performance or update of benchmarking studies are invoiced on a lump-sum basis.
This gives you a clear idea of the total cost of my support.
Frequently asked questions
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In practical terms, this involves identifying companies that have functions similar to yours and analyzing their margin level (the analysis generally focuses on margin rather than on prices).
The results of these companies are then used as a reference to assess whether your company's margin is in line with that achieved by independent companies for a similar activity.
The purpose of the benchmarking study is to demonstrate that the prices of your intragroup transactions correspond to those that would have been agreed between independent companies. In other words, that the prices of your intragroup transactions comply with the arm's length principle.
The benchmarking study aims to demonstrate that the prices of your intragroup transactions correspond to those that would have been agreed between independent companies.
This comparison can be made using internal benchmarks where your company carries out similar transactions with external customers (or suppliers).
If this is not the case, public databases should be used. These provide the financial data (balance sheets and profit and loss accounts) of companies that have filed their accounts (without opting for confidentiality!). Access to these databases is not free and is expensive.
In addition to the cost of access, there is also a painstaking and time-consuming work of defining the right search strategy and examining in detail the companies selected in the sample. The aim is to ensure that these companies are genuinely comparable and can be used as a reference to determine the appropriate margin level for your intragroup transactions.
The benchmarking study aims to determine the level of margin achieved by independent companies carrying out a similar activity to yours.
In most cases, your competitors are not included in the sample of comparable companies because they generally belong to
a group and are therefore not considered independent.
Their margins could be influenced by internal transfer pricing practices, which would distort the comparison.
Public databases only provide access to company accounts. Consequently, only an analysis of margins is possible (gross margin, operating margin, margin on operating costs) and not an analysis of prices.
The only exceptions are benchmarks of royalty rates for licences of intangible assets (patents, know-how, trademarks, etc.), where the aim is to identify in the appropriate database licence agreements comparable to the one in place in your company.
The other exception concerns benchmarks of interest rates.
The French tax authorities accept that benchmarking studies should be updated every three years, i.e. that a new benchmark should only be carried out every three years.
However, the financial data of the companies selected as comparables must be updated every year.
It is strongly recommended that you have up-to-date financial data, especially since 2024. From now on, you must justify the non-application of your transfer pricing policy in the event of a tax audit. Any discrepancy between the transfer pricing policy applied and the one described in the documentation is now considered to be a transfer of profits abroad.
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