ReAL Transfer Pricing: A New Paradigm for Transfer Pricing in Europe?
15 June 2006
By Pim Fris and Sébastien Gonnet
The "arm's length" principle drives the process of determining intra-group prices within multinationals enterprises (MNEs) around the world. However, in European countries where transfer pricing has been a hot topic for a number of years, practice shows that the tools used by MNEs in respect to transfer pricing design and analysis are not always sufficient to obtain the expected results of a manageable and defensible transfer pricing policy.
In this article from Tax Planning International, NERA Special Consultant Pim Fris and Senior Consultant Sébastien Gonnet discuss alternative approaches to transfer pricing, including Relational Arm's Length (ReAL) Transfer Pricing, a toolset that enables the definition of transfer prices that are consistent with both tax and business objectives. The authors argue that ReAL Transfer Pricing can help solve issues faced by MNEs when designing, implementing, and maintaining transfer pricing policies.
