TPG2022 Chapter II paragraph 2.147

« | »

Under the transactional profit split method, the relevant profits are to be split between the associated enterprises on an economically valid basis that approximates the division of profits that would have been anticipated and reflected in an agreement made at arm’s length. In general, the determination of the relevant profits to be split and of the profit splitting factors should be:

  • consistent with the functional analysis of the controlled trans- action under review, and in particular reflect the assumption of the economically significant risks by the parties, and
  • capable of being measured in a reliable manner.

Related Guidelines