 Please Mind the Gap: Arm’s Length Prices and Fair Market ValueBjörn Heidecke ()
A chapter in Intangibles in the World of Transfer Pricing, 2021, pp 263-272 from Springer Abstract: Abstract Arm’s length comparison is the guiding principle for transfer pricing purposes. In cases of valuations that are performed based on other standards, such as the fair market value, it is questionable to what extent such values can be considered to have an arm’s length nature in intercompany sales or licenses of intangibles. This chapter compares the arm’s length principle with fair market value. It demonstrates that they follow quite different principles. The fair market value has a rather objective perspective, whereas the arm’s length principle takes subjective aspects into consideration that results in a two-sided approach. As such, there is a gap between both standards, which might lead to different results. The magnitude of this gap depends on the specific facts and circumstances. Acceptance of a valuation that is based on fair market value (or other standards) depends on the underlying assumptions. This chapter outlines possible amendments to existing valuations that would lead to a better fit with the arm’s length standard and could even close the gap. Keywords: Arm’s length principle; Fair market value; Valuation standards; Valuation methods (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-319-73332-6_14 Ordering information: This item can be ordered from DOI: 10.1007/978-3-319-73332-6_14 Access Statistics for this chapter More chapters in Springer Books from Springer |
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