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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 cost-plus method calculates the arm's length price of a controlled transaction by considering the costs of the supplier in the transaction, and adding to these an appropriate mark-up to remunerate the supplier for functions performed, assets utilised and risks borne. The mark-up should be calculated by reference to similar internal or external uncontrolled transactions. The comparability of transactions is important, though (like the resale price method) fewer adjustments are required to account for product differences than with the CUP method.

The fact that enterprises may use different bases for reporting their costs can create problems when comparing transactions using the cost-plus method. For example, an independent party may categorise some costs as cost of sales and the group that is party