Tax

Transfer pricing

Peter Vale Peter Vale

Transfer pricing refers to the pricing of transactions between related companies, generally within the same group. For many companies, such transactions must be at an Arm’s Length Price (ALP) with documenting evidence supporting this pricing.

In 2011 transfer pricing legislation came into effect in Ireland. Since then all Irish companies within the ambit of transfer pricing law are obliged to maintain documentation evidencing the arm’s length nature of intra-group transactions. The ALP requires that transactions between related parties are priced for tax
purposes as if the counter-parties were unrelated.

Transfer pricing rules apply to all trading transactions of impacted companies. This includes the sale or purchase of goods or services from group companies, management charges, royalty payments/receipts in respect of Intellectual Property (IP), financing transactions and many more.