Transfer pricing policy, transfer pricing

Our experts help clients draw up a transfer pricing policy that provides a consistent, standardised and transparent set of rules and principles for transactions between related parties, taking into account the individual levels of management planned for the organisational structure of the capital group.

A transfer pricing policy is part of a transfer pricing system whose operation is directed at achieving the strategic and operational objectives of the business.

The main objective set for a transfer pricing policy is to shape the rules for transactions between related parties appropriately, both from the point of view of the company's objectives and of tax regulations, which is achieved through the following processes:

standardising the process of carrying out transactions,
standardising the valuation of transfers of assets or services, and
standardising the rules and principles for monitoring the execution of transactions.

Carrying out these processes rests with the people to whom the transfer pricing policy is addressed, in particular the management of the capital group, the management of the individual related entities, the staff of the finance departments, the staff of the operating departments and the staff of the human resources departments.

Procedure for drawing up a transfer pricing policy

The procedure for drawing up a transfer pricing policy contains at least the following points:

an analysis of the capital group's strategy and the division of that strategy into tactical and operational objectives,
an analysis of the organisational structure of the capital group and of its internal management subsystems,
an analysis of data on transactions carried out in the past and currently,
an analysis of transactions that may occur in the future, that is a simulation of possible transactions based on the data analysed and on the strategic objectives of the capital group,
an analysis of internal procedures for internal control and risk management,
an analysis of the legislation in the country where the capital group has its seat and in the countries where the policy will be implemented,
an analysis of cost accounting,
an analysis of the remuneration system for the management of the related entities,
an analysis of the system for assessing the individual performance of the related entities,
the preparation of an effective procedure for managing transaction documentation,
the preparation of a settlement system and of controls over the execution of transactions,

and many others, all intended to ensure that the transfer pricing policy works properly.