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Once a comparability analysis has been performed which determines the conditions and economically relevant factors of the controlled transaction (see B4.131), these conditions and factors can then be compared with those of comparable transactions of independent enterprises in order to determine an arm's length price. There are various ways to do this depending on the transaction type.

The resale price method (RPM)¹ starts with the price at which a product purchased from an associated entity is resold to an independent entity and reduces this price by an appropriate gross margin, the 'resale price margin'. The resale price margin represents the amount of income out of which the reseller in the open market would seek to cover its direct and indirect costs, in addition to making an appropriate level of profit. This margin should be calculated by reference to the margin in similar internal or external uncontrolled transactions. It takes into account risks assumed, assets utilised and functions performed by the reseller. Subtraction of the arm's length resale price margin and adjustment for other costs associated with