Boletín

The Comparable Uncontrolled Price (CUP) Method is used to establish the market value of a transaction between related parties by comparing it to similar transactions carried out between independent parties under comparable conditions. In this specific case, the CUP method was not applicable because, although the products sold to independent third parties and related parties were the same and the quantities were similar, there were significant differences in other factors such as: functions, assets, risks, geographic market, subjects, and/or price control.

These differences could not be completely eliminated. Only the differences related to functions, assets, and price control could be eliminated. The other differences, such as the geographic market, the subjects, and the risks, could not be eliminated and continued to affect the prices of the products.

Because of these significant differences, the transactions were not comparable and the CUP method was not a reliable method for determining the market value of the transaction between the related parties. Instead, an alternative transfer pricing method should have been used, such as the Transactional Net Margin Method (TNMM), which would take into account the differences between the transactions.

Consejo de Estado. Sentencia 27402 de 2024.