This analysis explores transfer pricing and the impact of DEMPE functions on remuneration for R&D service providers, suggesting implications for intragroup dealings.
16 Pages Posted: 30 Jan 2026 University of Virginia (UVA) School of Law - Alumni/Adjunct/Student Independent Ernst & Young Date Written: June 21, 2021 The paper provides a detailed analysis of Chapter I, Section D1 of the OECD Transfer Pricing Guidelines. The paper discusses the misinterpretation of both the control over risk standard and the so-called "DEMPE" activities as it relates to delineating the actual intracompany transaction between related parties that is to be priced under the arm's length principle. The paper uses contract R&D arrangements to illustrate the analysis. Keywords: Transfer Pricing, OECD, OECD Transfer Pricing Guidelines, DEMPE, Control over risk, Contract R&D Suggested Citation: Suggested Citation 580 Massie Road Charlottesville, VA United States Tax Law: International & Comparative Tax eJournal Subscribe to this fee journal for more curated articles on this topic
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McDonald et al. (2026) studied this question.
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