Business case
Our client, an industrial group specialised in naval-based defence, had representative offices and subsidiaries across the world. For each subsidiary, the French parent company entered into a management services agreement.
In the context of a management services agreement, a subsidiary pays a service fee to the parent company for services rendered. The methodology to determine the amount of the service fee must comply with the arm’s length principle defined by OECD guidelines. According to this principle, “transactions should be valued as if they had been carried out between unrelated parties”.
We were engaged to run an independent assessment of the benefits received by the foreign subsidiaries from the French parent company.