Transfer Princing

intellectual property transfer pricing valuation
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Transfer Pricing

Transfer pricing refers to the pricing of contributions, including intangible assets, that are transferred within an organization. For example, the corporate brand from one operating division may be licensed to a separate operating division, or technology from a parent company may be licensed to a foreign subsidiary.  Since the prices are set within an organization (i.e., they are “controlled” transactions), the typical market mechanisms that establish prices for such transactions between third parties may not apply.  The choice of the transfer price will affect the allocation of the total profit among the various parts of the company. It is important that the terms of the transaction mirror those resulting from an “arm’s-length” negotiation.


We can analyze prospective transactions where intangibles are subject to transfer pricing.  For example, the corporate brand of a conglomerate may be held in a separate company for ease of management and will be licensed to all of the operating divisions of the conglomerate.  IPmetrics can help determine the proper level of compensation necessary for the transactions to qualify as consistent with an arm’s-length negotiation. 


Transfer pricing abuses are a major concern for fiscal authorities who worry that multi-national entities may set transfer prices on cross-border transactions in a way that reduces taxable profits in their jurisdiction.  This has led to the rise of transfer pricing regulations and enforcement, making transfer pricing a major tax compliance issue for multi-national companies.  IPmetrics’ experience in working with these kinds of transactions enables us to provide you with competent advice and valuation assistance.

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