Operations & compliance
Low value-adding intra-group services
Low value-adding intra-group services are support functions, such as payroll, IT helpdesk or general administration, that are not part of the group's core business and do not create or use unique intangibles, and the OECD offers a simplified approach allowing a standard 5% mark-up without detailed benchmarking for these.
To qualify for the simplified approach, services must be supportive in nature, not require unique intangibles, and not involve significant risk assumption, and the group must maintain a description of the services, the allocation key used, and the calculation showing how the charge was derived for each entity.
Using the simplified approach reduces the compliance burden considerably compared with full benchmarking, but groups still need to keep the underlying documentation current, since tax authorities can and do challenge whether a service genuinely qualifies as low value-adding rather than core to the business. This matters in.
In practice
What matters when applying low value-adding intra-group services
- Confirm services meet the eligibility criteria
- Apply the standard 5% mark-up where available
- Maintain the required documentation package
- Exclude services touching unique intangibles
- Check local country adoption of the approach
Frequently asked
Common questions
What mark-up applies under the simplified approach?+
A standard 5% mark-up on costs is applied without the need for a full benchmarking study, provided the services meet the OECD's low value-adding criteria. This matters in practice.
Do all countries accept the simplified approach?+
No, adoption varies by jurisdiction, so groups should check local rules before relying on the simplified approach in every country where the recipient entity is based. This matters in practice.
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.