Definition · intercompany
Transfer pricing
Transfer pricing is the practice of setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle. For transfer pricing, a useful definition states setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle, who owns it, and which decision it supports.
Also known as intercompany transfer pricing, related-party pricing
Why it matters
Understanding transfer pricing matters because leaders need a shared, source-backed meaning before they can compare results, explain performance, or decide what to do next. Pluvo surfaces intercompany pricing across entities and the margin it leaves in each, so transfer-pricing exposure is visible in the same place the consolidation runs.
In practice
Operating example
Transfer pricing is useful when teams need a shared interpretation of setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle. The definition should make source data, timing, ownership, and the decision it supports explicit.
Pluvo example
Pluvo surfaces intercompany pricing across entities and the margin it leaves in each, so transfer-pricing exposure is visible in the same place the consolidation runs.
In practice, teams should define transfer pricing with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.
Understanding transfer pricing matters because leaders need a shared, source-backed meaning before they can compare results, explain performance, or decide what to do next. Pluvo surfaces intercompany pricing across entities and the margin it leaves in each, so transfer-pricing exposure is visible in the same place the consolidation runs.
A strong workflow for transfer pricing separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.
Pluvo surfaces intercompany pricing across entities and the margin it leaves in each, so transfer-pricing exposure is visible in the same place the consolidation runs.
FAQ
What is transfer pricing?
Transfer pricing is the practice of setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle. For transfer pricing, a useful definition states setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle, who owns it, and which decision it supports.
What is the arm's length principle?
Transfer pricing is the practice of setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle. For transfer pricing, a useful definition states setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle, who owns it, and which decision it supports. For transfer pricing, the practical boundary is setting prices for goods, services, or intangibles exchanged between related entities under the arm's length principle.
Sources
- Understanding Transfer Pricing: Tax Implications and ... Investopedia https://www.investopedia.com › ... › Accountinginvestopedia.com
- Transfer Pricing - Definition, Example, Benefits, Risks Corporate Finance Institutecorporatefinanceinstitute.com
- Transfer Pricing PwC https://www.pwc.com › tax1 › transfer-pricingpwc.com