Cost plus method. The cost plus method is the method that builds on the cost of the product or service. On top of that cost of manufacturing or acquiring, a market based cost plus markup is added. Just as the RPM the cost plus method is an indirect method for setting a TP accordingly to the arm’s length principle (Skatteverket, 2010). As mentioned, when using this method to set an arm’s length price between a seller and an associated buyer, the price is based on the seller’s cost of producing or acquiring a product or service with addition of the costs for every link in the MNE, plus a cost plus markup that is market based. The seller’s original cost for the product or service include both the costs for acquiring the semi-finished products or the raw material, and also the production costs for completion of the finished product or service, plus a markup for a reasonable profit. To the added cost for every party in the line of production a market based profit margin is added, which is calculated by comparisons from independent corporations. Nevertheless, in order to perform a comparison, just as with the CUP method, it is necessary that the two conditions mentioned in chapter 5.2.2 in this thesis are fulfilled. However, the necessary adjustments with this method, just as with the RPM are usually not as heavy as when using the CUP method. Two situations where the cost plus method is most useful are when semi-finished goods are sold between associated corporations and when the controlled transaction is concerning the provision of services (OECD TP guidelines, 1995). One downside to the method is that regulations and ways of account for costs vary between countries, which can cause severity on determining a relevant data of costs (OECD TP guidelines, 1995). One important thing to keep in mind when determining this data is to also include indirect costs and not only the direct costs (SKV M 2007:25). However, when using the cost plus method it can be necessary to use cost calculations based on averages. A limitation to the method is that it is only the costs of the supplier of the goods that are being considered, and this can raise allocation problems of some of the costs between suppliers and purchasers. Since there are no single solution to deal with all these minor issues, the associated corporations can, in advance, agree on what costs that will be an acceptable basis for the cost plus method (OECD TP guidelines, 1995).
