Operations & compliance
Hourly rate benchmarking
Hourly rate benchmarking is the process of comparing the rates a group applies to intercompany service time, for example consulting, engineering or IT support hours, against rates charged by independent providers for comparable work, seniority and jurisdiction, to demonstrate that intercompany pricing sits within an arm's.
Rates typically need to be broken down by role, seniority and location, since a senior engineer in one jurisdiction commands a materially different market rate than a junior support analyst elsewhere, and blending everyone into a single flat rate is a common weakness that tax authorities pick up on during review.
Building a defensible rate card means sourcing comparable market data by role and geography, updating rates periodically to reflect inflation and market movement, and keeping a clear record of how each rate was derived so the calculation can be walked through quickly if a tax authority asks for it. This matters in practice.
In practice
What matters when applying hourly rate benchmarking
- Break rates down by role and seniority
- Source comparable market data by geography
- Update the rate card periodically
- Keep the derivation documented
- Avoid one flat blended rate group-wide
Frequently asked
Common questions
Why not use one flat hourly rate for the whole group?+
A single blended rate ignores real differences in seniority and location, which weakens the arm's length defence and is a common point tax authorities challenge during review. This matters in practice.
How often should hourly rates be refreshed?+
Rates should be refreshed at least annually to reflect inflation, market movement and any changes in the roles or locations being charged out. This matters in practice. Groups that get this wrong face avoidable risk.
See how the tooling handles this in practice
Our transfer pricing tools calculate intercompany charges, benchmark financing and reconcile the intercompany ledger from your own data. Book a short walkthrough and we will show the workflow on a scenario that matches your group structure, rather than a generic demo dataset.