Transfer Pricing

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Insights, guides, and tools where Transfer Pricing shows up.

• Guide

  International Expansion Tax: GILTI, Subpart F, and Transfer Pricing for Your First Foreign Subsidiary

Frequently asked questions

What is Transfer Pricing?

When a US parent and foreign subsidiary transact with each other (license IP, sell services, etc.), prices MUST be at arm's length, meaning what unrelated parties would pay. If transfer prices are off, IRS can ADJUST them upward, creating taxable income. Penalties: 20-40% of the adjustment. Required: contemporaneous transfer pricing documentation for material cross-border transactions. Critical scenarios: US parent licensing software IP to foreign sub, foreign sub paying US for shared services, cost-sharing arrangements.

Why is Transfer Pricing important for startups?

Transfer Pricing is a tax concept that matters for startup founders because it shows up in fundraising readiness, financial decision-making, and operational discipline at the stage where mistakes are expensive to undo. Founders who understand it are better prepared for diligence, board meetings, and investor conversations.

What category does Transfer Pricing belong to?

Transfer Pricing is a Tax term in the StartupCFO finance glossary, alongside other tax concepts that founders, CFOs, and accountants use in startup operations and reporting.

Where can I learn more about Transfer Pricing?

Beyond this definition, see the related tax terms below, or explore StartupCFO's insights and tools that put Transfer Pricing in context. For specific situations, talk to a fractional CFO who can walk through your numbers.