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October 15, 2023
18 min read

CPM vs TNMM: What's the Difference?

Borys Ulanenko

Borys Ulanenko

CEO, ArmsLength AI

CPM vs TNMM: What's the Difference?

TL;DR - Key Takeaways

  • CPM (US) and TNMM (OECD) are essentially the same transfer pricing method with different names, both examining net profit indicators of related-party transactions.
  • Both methods use a 'tested party' approach, selecting the less complex entity without unique intangibles to benchmark against comparable companies.
  • These methods have become dominant globally due to practical advantages: tolerance for functional differences and easier access to comparable data.
  • Understanding jurisdictional nuances in implementation is crucial to prevent double taxation and successfully defend transfer pricing positions.
  • Case law shows that proper selection of comparables and consideration of unique intangibles are critical for a successful CPM/TNMM analysis.

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