Transfer Pricing
International Compliance and Group Reorganisation
ALS Transfer Pricing designs transfer pricing policies consistent with the OECD Guidelines and local regulations, providing specialist advice on group reorganisations, intangibles management and adaptation to digital business models.
What this service covers
We develop intra-group policies that translate the group's operating model into prices consistent with the arm's length principle, aligned with the OECD Guidelines and applicable across all jurisdictions in which the group operates.
We analyse the transfer pricing implications of group reorganisations — transfers of functions, risks and assets between entities — and determine the arm's length compensation that may be required.
We assess the economic and legal ownership of the group's intangibles, the return attributable to each entity based on its DEMPE contributions, and the arm's length consistency of licence and assignment agreements.
We assess the impact of new global minimum tax rules (Pillar Two) and the reallocation of profits from digital business models (Pillar One) on the group's transfer pricing policy.
We map the group's value chain to identify where significant functions, assets and risks are created, ensuring that the distribution of results among entities faithfully reflects that economic reality.
We coordinate the implementation of the transfer pricing policy across multiple jurisdictions, ensuring that intra-group arrangements are consistent and reduce the risk of double taxation.
Transfer pricing policy and group reorganisations
A group reorganisation that is poorly designed from a transfer pricing perspective can generate significant adjustments and penalties across multiple jurisdictions. The analysis must consider which functions, risks and assets are being transferred, at what price, and whether that price is arm's length. ALS accompanies the group at every stage of that process.
Valuation of function and risk transfers
We determine whether there is a transfer of value that warrants compensation — an exit charge — and calculate the arm's length amount that the transferring entity should receive for the assets, functions or risks being transferred.
Cost contribution arrangements for intangible development (CCSA/QCSA)
We structure cost contribution arrangements for the joint development of intangibles, ensuring that buy-in payments and ongoing contributions reflect the value each entity contributes and expects to receive.
Alignment with the group's actual operating model
We verify that the documented policy is consistent with the group's functional reality: intra-group contracts must support the intended profit allocation and must not contradict the entities' actual conduct.
Intangibles, digital models and Pillar Two
The digital economy and the new global rules under the OECD/G20 Inclusive Framework have added considerable complexity to transfer pricing policy. Groups operating across multiple countries must assess how these rules affect their current structure and anticipate necessary adjustments before tax authorities require them.
Attribution of intangible returns under DEMPE
Post-BEPS OECD Guidelines require that intangible returns be attributed to the entities that perform development, enhancement, maintenance, protection and exploitation functions, regardless of who holds the legal title.
Pillar Two: 15% global minimum tax
Groups with consolidated revenues above EUR 750 million are subject to the top-up tax under the GloBE rules. We assess the impact on the existing intra-group policy and identify potential mitigation measures.
Transfer pricing in digital business models
The global-scale provision of digital services raises specific questions about where value is created, how to remunerate user participation and what share of the margin should be attributed to each market. We analyse these issues with technical rigour and from the perspective of the current OECD Guidelines.
How we design and align the group's transfer pricing policy
Operating model diagnosis
We analyse the group's structure, value flows, location of key functions and current risk distribution to identify the areas of greatest exposure and opportunities to strengthen the intra-group policy.
TP policy design
We develop a transfer pricing policy consistent with the group's actual operating model and the OECD Guidelines, establishing clear pricing criteria for each type of intra-group transaction and their economic rationale.
Jurisdictional impact assessment
We review the applicability of the policy in each relevant jurisdiction, identify conflicts between local rules and the global policy, and propose adjustments that preserve coherence without exposing the group to unnecessary risk.
Implementation and ongoing review
We support the group in the contractual and operational implementation of the policy and establish a periodic review process to adapt it to changes in the business model, international regulations or actual financial results.
FAQs
Frequently asked questions about international compliance and group reorganisation
What is a transfer pricing policy and why does the group need one?
A transfer pricing policy is the document that defines how the group prices its intra-group transactions and why those prices are arm's length. Without a coherent, well-documented policy, each entity may apply different criteria, creating inconsistencies that tax authorities readily detect and that can lead to adjustments across multiple jurisdictions.
When does a business reorganisation create transfer pricing obligations?
Any reorganisation that involves a transfer of functions, assets or risks between group entities may create a compensation obligation if the transferring entity ceases to earn profits it was previously entitled to. The OECD Guidelines establish that this loss of profit potential must be remunerated at arm's length, and tax authorities — particularly in Europe — pay particular attention to these transactions.
How does Pillar Two affect the group's intra-group policy?
Pillar Two introduces a top-up tax that raises the effective tax rate of group entities to 15% in each jurisdiction. This may mean that intra-group structures that were historically tax-efficient no longer are, or that locating certain functions or intangibles in particular territories loses its appeal. Reviewing the TP policy in light of these rules is a necessary step for affected groups.
What criteria determine which entity within the group is entitled to the return from an intangible?
Post-BEPS OECD Guidelines establish that intangible returns must be attributed to the entities that perform DEMPE functions — development, enhancement, maintenance, protection and exploitation — regardless of who holds the legal title. This means that an entity that merely holds formal ownership without performing relevant functions is not entitled to the full return from the intangible.
What is the difference between an intra-group licence and a cost contribution arrangement for intangible development?
A licence agreement remunerates the use of an existing intangible through a periodic royalty. A cost contribution arrangement — CCSA or QCSA — allows several group entities to share the costs of creating a future intangible and, in return, acquire the right to exploit the outcome without subsequent royalties. The choice between the two has material implications for risk allocation and tax treatment in each country.
Can a transfer pricing policy designed for one country be applied directly in others?
Not without prior analysis. Although the OECD Guidelines serve as a common reference, each jurisdiction has specific rules that may require adjustments to the global policy. Some countries require specific methods, have stricter documentation requirements or do not accept certain types of intra-group arrangement. A well-designed policy must be coherent at its core and flexible in its local application.
ALS Transfer Pricing
We design transfer pricing policies consistent with the OECD Guidelines and advise groups with international operations on reorganisations and structural alignment.