Transfer Pricing
Transfer Pricing Advisory
ALS Transfer Pricing guides domestic and international groups from the initial risk diagnosis through to the technical defence of their transfer pricing policies, combining regulatory expertise with strategic business insight.
A comprehensive approach for every group
We verify that the terms of each related-party transaction are consistent with those that independent parties would agree, applying the methods recognised by the OECD Guidelines and applicable local legislation.
We build the group's transfer pricing policy from its functional reality: value chain analysis, risk allocation and alignment with business strategy.
We identify the related-party transactions with the greatest tax exposure, assess the consistency of existing policies and prioritise actions according to the group's risk profile.
We advise on the practical implications of the BEPS Project for the group's structure, including transparency obligations, Country-by-Country Reporting and cross-jurisdictional consistency.
We analyse the tax impact of restructuring decisions, international expansion or supply chain modifications from a transfer pricing perspective.
We prepare mandatory documentation and build robust technical and economic arguments to support the group's policies before any tax authority.
The arm's length principle as the starting point
Every transfer pricing policy starts from the same requirement: transactions between related companies must be valued as if they had been agreed between independent parties under market conditions. This principle, recognised in the OECD Guidelines and transposed into national legislation across jurisdictions, determines both how the group's policy is designed and how robustly it can be defended during an inspection. Rigorous application of the arm's length principle is not only a legal obligation — it is the central technical argument of any compliance strategy.
OECD valuation methods
We select the most appropriate method for each type of transaction — comparable uncontrolled price, resale price, cost plus, transactional net margin or profit split — with the economic justification that supports that choice.
Functional analysis of the group
The starting point of any analysis is the economic reality of the group: what functions each entity performs, what assets it uses and what risks it assumes. Without that functional map, it is not possible to build a consistent or defensible policy.
Cross-jurisdictional consistency
An effective transfer pricing policy must be consistent across all group entities. We identify asymmetries between jurisdictions and define uniform criteria that can withstand scrutiny from multiple tax authorities.
Strategic insight, not just compliance
Transfer pricing affects decisions that go well beyond tax compliance: the location of key functions, the attribution of intangibles, intra-group financing structures or supply chain reorganisation all have tax consequences that must be anticipated. ALS Transfer Pricing integrates the transfer pricing perspective into the group's strategic analysis, contributing a view that combines regulatory rigour with genuine business understanding.
Early risk identification
The initial diagnosis allows misalignments between the declared policy and the group's operational reality to be detected before they materialise as an inspection risk. The earlier they are identified, the more options exist to address them.
Planning ahead of restructurings
When the group modifies its structure — whether through growth, merger, entry into new markets or functional reorganisation — transfer pricing policies must be reviewed in parallel to avoid unforeseen tax exposures.
Coordination with local advisers
In groups with a presence in multiple jurisdictions, we coordinate the transfer pricing analysis with local tax advisers to ensure a coherent and consistent position in each country.
How we work with each group
Initial diagnosis
We analyse the group's structure, the map of related-party transactions and the existing documentary position. The aim is to identify priority risks and establish a realistic action plan.
Transfer pricing policy design
We define the most appropriate transfer pricing policy for the group, consistent with its functional analysis, the applicable OECD methods and the obligations of each jurisdiction.
Documentation and technical support
We prepare the mandatory documentation — Local File, Master File, CbCR — and the economic analyses that underpin the group's policy, with criteria defensible before any tax authority.
Annual review and contingency management
We review the policy and documentation each year, adapt the analysis to changes in the group and provide support throughout any information request or tax inspection that may arise.
FAQs
Frequently asked questions
What is the arm's length principle and why does it underpin all transfer pricing regulation?
The arm's length principle requires that transactions between related companies be conducted under the same economic conditions that independent parties would agree. It is the central pillar of the OECD Guidelines and of national transfer pricing legislation across jurisdictions. All documentation structures and valuation methods derive from this principle: without it, there is no reference point against which to assess whether a transaction reflects market conditions.
Which groups are required to document their transfer pricing?
Any company that transacts with related entities — whether other group companies or shareholders with a significant stake — is subject to transfer pricing rules. Under the Spanish common regime, groups with consolidated turnover above €45 million must prepare full documentation; those below that threshold but with related-party transactions above €250,000 under the Spanish common regime may use a simplified format. In all cases, documentation must be available when the tax authority requests it.
What is the difference between designing a transfer pricing policy and documenting it?
Designing the policy is the strategic work: determining how functions, assets and risks are distributed across group entities, which valuation method applies to each transaction and how the internal price is set. Documentation is the technical record of that policy, demonstrating to the tax authority that transactions comply with the arm's length principle. Both are necessary, but they are not the same thing: a poorly designed policy cannot be rescued by well-written documentation.
What risks does a group face if it has no defined transfer pricing policy?
The absence of a policy exposes the group to several types of risk. The most obvious is a bilateral adjustment by the tax authority, which can increase the taxable base and generate double taxation that is difficult to resolve. But there are others equally significant: inconsistencies between what is reported in different jurisdictions, penalties for documentary non-compliance and the absence of technical arguments with which to respond to an inspection. The risk is not always that a transaction has been mispriced; often the problem is simply that it cannot be justified.
How does the BEPS Project affect a group's transfer pricing policy?
The OECD's BEPS Project introduced significant changes to the way transfer pricing is analysed and documented: greater demands on the justification of value creation, new transparency obligations such as Country-by-Country Reporting and stricter criteria for intangibles and intra-group financial structures. Effective compliance requires reviewing not only the documentation but the coherence of the group's own policy with BEPS standards, since a technically correct document built on a misaligned policy provides limited protection.
When is it advisable to carry out a transfer pricing diagnosis even when there is no ongoing inspection?
A diagnosis has greater value as a preventive tool than as a reactive one. It is particularly advisable when the group has undergone significant changes — an acquisition, a functional reorganisation, entry into new markets or the creation of a new business line — because those changes alter the risk map. It is also relevant when the existing documentation has not been reviewed for several years or when there are material disparities in the results of different group entities that could attract the attention of tax authorities.
ALS Transfer Pricing
Tell us about your group's structure and we will show you how we can help you manage your transfer pricing with rigour and strategic vision.