In the Bloomberg 2024 Transfer Pricing Forum, Managing Director Philip de Homont and Director Tom Braukmann explain considerations for transfer pricing of contract manufacturing. They offer insights on what kinds of contract manufacturing operation tax authorities in Germany view as high risk and how multinational entities (MNEs) can safeguard their transfer pricing positions to mitigate risk.

The authors discuss what types of benchmarking studies are accepted or typically applied when remunerating contract manufacturers in Germany. In addition, they discuss transfer pricing implications for government subsidies or grants in contract manufacturing. Finally, the authors explain transfer pricing considerations for financing expenses related to transactions involving contract manufacturers and who should bear the foreign exchange risks in these transactions.