Avalara Supported Intercompany Transactions
| # | Intercompany Transaction Type | Transfer Pricing Model | Transaction Type Description | Benchmark Range FY 2020 (1st quartile% - median% - 3rd quartile%) |
Benchmark Applied on | ||
|---|---|---|---|---|---|---|---|
| America | Europe | Asia | |||||
| 1 | Management services | Cost Plus | Management services include activities, such as strategic management and involvement of the board of directors and leadership. | 8.3% - 10.9% - 13.5% | 7.7% - 10.7% - 19.6% | 5.8% - 12.4% - 21.6% | Service provider's mark-up on costs |
| 2 | Administration services | Cost Plus | Administration services include activities, such as HR, finance, accounting, tax, IT, and legal. | 3.4% - 4.7% - 6.0% | 1.6% - 5.7% - 11.6% | 2.5% - 6.7% - 9.5% | Service provider's mark-up on costs |
| 3 | Combined management & admin services (HQ services) | Cost Plus | Combined management and administration services include activities by the headquarters, partly or completely. | 4.7% - 6.6% - 10.6% | 3.4% - 9.2% - 16.4% | 2.9% - 8.3% - 15.6% | Service provider's mark-up on costs |
| 4 | Marketing services | Cost Plus | Marketing services include activities, such as pre-sale, advertising, PR, branding, market research, and lead generation. Sales activities are excluded. | 3.6% - 6.6% - 15.6% | 2.9% - 9.1% - 12.5% | 4.4% - 8.3%- 11.8% | Service provider's mark-up on costs |
| 5 | Software R&D services | Cost Plus | R&D services (software) include activities, such as software development, bug fixing, product management, QA, UX, and software architecture. | 5.4% - 7.4% - 9.3% | 3.1% - 7.9% - 10.1% | Service provider's mark-up on costs | |
| 6 | Logistic services | Cost Plus | Logistic services include activities, such as shipping, warehouse, inventory management, shipping, procurement, and packaging. | 3.5% - 7.8% - 10.4% | 4.0% - 6.4% - 8.4% | 2.6% - 4.2% - 7.3% | Service provider's mark-up on costs |
| 7 | Customer support services | Cost Plus | Call center services include activities, such as post-sale, customer care, and tier-one support. | 2.4% - 4.4% - 7.3% | 3.0% - 6.2% - 9.9% | 0.7% - 5.0% - 8.9% | Service provider's mark-up on costs |
| 8 | Laboratory services | Cost Plus | Laboratory services include activities, such as medical testing and diagnostic. | 5.3% - 15.2% - 18% | 11.7% - 16.7% - 21.9% | Service provider's mark-up on costs | |
| 9 |
Manufacturing services (HVAC and large kitchen appliances) |
Cost Plus | HVAC contract manufacturer services include activities, such as manufacturing of HVAC or similar products. | 6.4% - 11.4% - 14.9% | 6.0% - 6.3% - 12.1% | Service provider's mark-up on costs | |
| 10 | Product and civil engineering services | Cost Plus | Product engineering services include activities, such as electronic and industrial products design, digital transformation, and manufacturing-related engineering services. | 2.2% - 3.8% - 5.2% | Service provider's mark-up on costs | ||
| 11 | Manufacturing services (Motor parts) | Cost Plus | Manufacturing services of automobile components and related accessories. | 4.7%-6.6%-10.1% | Service provider's mark-up on costs | ||
| 12 | Manufacturing services (Electronics) | Cost Plus | Manufacturing services of electronic components, finished electronics goods, and OEM. | 5.1%-5.7%-10.3% | 3.0% - 7.0% - 12.9% | Service provider's mark-up on costs | |
| 13 | Commercial printing | Cost Plus | Commercial printing services include activities, such as paper printing, catalogs, magazines, shrink sleeve labeling, and packaging. | 4% - 4.2% - 11.1% | Service provider's mark-up on costs | ||
| 14 | Wholesale of groceries and pharmacies related goods | Low-Rsk Distributor | Reseller entities are engaged in the wholesale of paper products, office supply, books, toys, gifts, stationery, and kitchen appliances. | 0.8 %- 1.1% - 1.4% | 2.1%-3.9%-5.9% | 1.1% - 1.4% - 3.5% | Resller's operarting profit margin |
| 15 | Wholesale of industrial products and equipments | Low-Rsk Distributor |
Reseller entities are engaged in the wholesale of machinery, industrial equipment, power generators, electronic parts, electrical products. These entities may provide technical support for the customers. |
2.9%-4.8%-7.3% | 0.7% - 1.1% - 4.9% | 3.2% - 3.7% - 4% | Resller's operarting profit margin |
| 16 | Software resale | Low-Rsk Distributor | Reseller entities are engaged in the resale of software products, solutions, SaaS based subscriptions, and minor hardware. | 1.6% - 2.4% - 3.5% | 1.8% - 2.3% - 2.7% | 3.2% - 4.9% - 5.5% | Resller's operarting profit margin |
| 17 | Software license royalties | Royalty (CUP) | Royalties for the use of intellectual property including know-how, algorithms, and formulas, whether or not the technology is patented. | 7% - 12.5% - 25% | 7% - 12.5% - 25% | 7% - 12.5% - 25% | Licensor's sales |