Transfer Pricing — Pricing Transactions Between Related Companies
Transfer pricing governs how related companies in a group price transactions with each other — goods, services, loans, or intellectual property. Tax authorities require these prices to reflect what unrelated parties would agree.
What it is
When entities under common control trade with one another, the prices they use shift profit between them — and between countries. Transfer-pricing rules constrain that.
The arm's-length principle
The core standard is that intra-group prices should match those that independent parties would set in comparable conditions, supported by documentation.
Why founders care
Founders with a holding company and operating subsidiaries, or intellectual property in one entity and sales in another, can fall within these rules and the documentation they require.
FAQ
- Does transfer pricing only affect large multinationals?
- No. Any group with entities in different countries trading with each other can be in scope, though documentation expectations scale with size. This is informational only.
- What is the arm's-length principle?
- The idea that transactions between related companies should be priced as if the parties were independent, set out in OECD guidance and national rules.
Related
Sources
- OECD — OECD — economic and tax statistics (accessed ; reviewed )Covers: Comparable corporate tax, statutory rate, and economic indicators across member and partner economies.Does not cover: Effective tax rates, deductions and incentives, local surtaxes, and personal residency rules.Why it matters: Used as a cross-country baseline to sanity-check rates against primary tax-authority figures.Review cadence: Annual, plus on major statutory changes.
- PricewaterhouseCoopers — PwC Worldwide Tax Summaries (accessed ; reviewed )Covers: Corporate income tax, VAT, and dividend withholding rates across most covered jurisdictions.Does not cover: Your specific effective rate, bespoke incentives, rulings, or transactions requiring professional advice.Why it matters: Used to triangulate rates against primary tax-authority sources, not as the sole authority.Review cadence: Updated by the publisher per tax year; re-checked each data review.
Informational only. This content is informational only and does not constitute tax, legal, accounting, or financial advice. Tax and compliance requirements can vary by jurisdiction, residency, business activity, ownership structure, and regulatory changes. See the methodology, disclaimer, terms, and sources.
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