We typically support our clients in the role of a neutral expert, exercising integrity and objectivity, in line with the ethical standards of the Global Association of Certified Valuators and Analysts. As such, we serve our client’s interest by providing reliable results as conclusions, recommendations, or positions based on unbiased professional judgement.
Process and outcomes of our analyses are set out either in formal written reports or memoranda. Their contents are selected to provide, in sufficient detail, a clear and well-structured description of the basis and reasons for our results. These reports and memoranda can then be used by the client internally as well as with relevant external stakeholders, such as with tax administrations and other relevant government agencies.
Transfer Pricing Services
Functional and Comparability Analyses
A detailed comparability analysis represents the bedrock of transfer pricing. In practice, it often focuses on the functional profile of the parties to the controlled transaction and is required as part of the transfer pricing documentation in most tax jurisdictions. We support our clients by preparing detailed comparability or functional analyses based on comprehensive desk research and interviews with key personnel involved in the transaction.
Policy Setting and Implementation
Frequently, multinational groups engage in a multitude of controlled transactions with relatively low volumes or frequencies. In many cases, budget restrictions do not allow for the performance of detailed transfer pricing analyses. We support our clients in allocating their limited resources in a rational manner by developing pragmatic solution approximating likely arm’s-length outcomes.
Benchmarking Studies
Benchmarking studies provide the quantification necessary to set actual transfer prices. Based on detailed functional analyses, they regularly are a requirement as part of a multinational enterprise’s transfer pricing documentation. To support our clients, we select suitable databases, determine appropriate search strategies, and perform quantitative and qualitative screenings. The result is typically expressed as a range of arm’s-length results, but depending on the engagement we can also provide point estimates.
Cross-Border Restructurings
Cross-border reorganizations of commercial or financial relations between related parties, so-called restructurings, require arm’s-length compensation similarly to intra-group sales or goods or provisions of services. Based on the guidelines provided by the OECD and international valuation standards, we support our clients in the accurate delineation of the restructuring as well as the reliable valuation of the transferred activities and assets as well as the services provided in connection with the transfer.
Low Value-Adding Services
International guidelines allow a simplified approach for certain types of intra-group services, so called Low Value-Adding Services (“LVAS”). While still requiring a detailed functional analysis, it dispenses with the need for a costly benchmarking study, provided certain requirements are met. We support our clients by analyzing their intra-group services, including the cost structure and benefits received, to determine if the requirements for LVAS are met.
OECD-Compliant Documentation
To compensate for the information asymmetry between taxpayers and the tax administration, most countries require contemporaneous transfer pricing documentation (“TPD”) based on the requirements set by the OECD Guidelines. Compliant TPD is not only important to obtain penalty protection but is also an important tool to facilitate tax audits. We support our clients by compiling existing functional analyses and benchmarking studies, supplement further information, and prepare formal Master and Local Files.
Expert Opinions for Audits, Rulings, and Litigation
Tax audits, ruling applications, and court trials regularly address difficult economic matters. Where these have not been addressed in advance by a valid documented analysis, complications can arise and additional risk of tax adjustments and penalties arise. We support our clients with comprehensive analyses and advice for their discussions with tax authority or tax court.
Other Valuation Services
Business Valuations
The valuation of businesses is a complex field, as exemplified by the large number of national and international standards addressing the topic. Typically, business valuations are based on the income approach and thus involve the challenge to reliably forecast revenues, expenses, and cash flows. We support our clients in selecting suitable valuation standards and bases of value, collecting and analyzing relevant data, developing forecasts and financial models, and with determining a reliable business value, either as point-estimate or as range.
Intangible Asset Valuations
Over the last decades, intangible assets such as patents, trade secrets, and trademarks, have developed to become the main driver of business value. With this, valuations for business evaluation, strategy development, as well as for regulatory purposes have increased dramatically in importance. We support our clients with comprehensive fact-finding, delineation and forecast of relevant cash flows, as well as the selection and application of suitable valuation methodologies.
Digital Asset Valuations
With the rise of cryptocurrencies and Web3 applications, digital assets have emerged as a new class of economic resources. Pricing for token sales, tax reporting of gains and losses, or assessments of collaterals are a few relevant examples of respective valuation needs. We support our clients with comprehensive analyses, allowing for a reliable evaluation of their economic characteristics and thereby selection of the most appropriate valuation methodology.
Value Chain Analyses
The value chain of an individual business or an industry describes the sequence of activities creating customer value and generating profit margins. Comprehensive value chain analysis is a key instrument in understanding the competitive advantage of a company, including product differentiation as well as cost advantages and disadvantages. We support our clients by helping to identify the relevant value-creating activities, evaluate their contributions, and allocate costs, to allow for a precise understanding of the value chain.
Profit-Split Calculations
Profit splits are a popular means of facilitating collaboration between different autonomous teams or divisions. An appropriate calculation helps enabling fair evaluation of business success and facilitates collaboration. We support our clients in identifying the relevant drivers of business value by thorough fact-finding and quantifying the separate value contributions based on economic principles, which then serve as yardstick for the profit split.
Commercial Damages and Lost Profits
Incidents like breaches of contract or patent infringements frequently establish legally enforceable claims that need to be quantified. This requires the collection of relevant evidence as well as the consideration of actual or potential mitigation measures. Based on this information, we support our client by analyzing the evidence, creating a valid financial model, and preparing a transparent report that can be used in negotiations or litigation.
High Professional Standards
Basis for our support are the GACVA Professional Standards in their current form as of June 2023. These principles-based standards have been developed by the Global Association of Certified Valuators and Analysts to provide guidance to valuation professionals performing valuation and other professional services. The appropriate use of professional judgement is an essential component.
For valuation services, we typically rely on the International Valuation Standards in their current form as of January 2025. These standards, also principle-based, are developed by the International Valuation Standards Council to promote and maintain a high level of public trust in valuation practices. As such, they establish appropriate global requirements for valuations. Where clients require this, we can also support with valuations under domestic standards such as the German IDW S1.
Specifically for transfer pricing analyses, we rely on the arm’s-length standard as laid down especially in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations in their current form as of January 2022. These guidelines are prepared by the OECD’s Committee on Fiscal Affairs to help avoid economic double taxation, comply with social responsibilities, and support an economically efficient business setup.