INTM467050 - Establishing the arm's length price: gathering your own evidence - Using hybrid methods

Generally you will find that one of the OECD methods will provide a 'best possible' solution. However you may come across either particularly complex cases, or cases where the group has commissioned a very thorough transfer pricing report, where hybrid methods have been used or one method is used to substantiate another.

A detailed profit split methodology will invariably involve calculating an arm’s length return to reward routine functions; this may involve the use for example of cost plus, and/or resale minus. (See INTM467160 for a more detailed case study).

Depending on the facts of a case, it may be wise to use a mix of methods, or use one method to substantiate another, in order to try and establish a more accurate arm’s length price, for example using a TNMM method to check a resale minus method, or vice versa. See INTM467030 for an example (example 2).