▸ Step 1 — Select Transfer Pricing Method
▸ Step 2 — Enter Transaction Details
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Check whether your intercompany transaction margin falls within accepted arm's length ranges under five OECD-approved transfer pricing methods. Get an instant risk assessment.
Transfer pricing refers to the rules and methods governing how prices are set for transactions between related entities within a multinational enterprise (MNE). When a parent company sells goods, provides services, or licenses intellectual property to its subsidiary in another country, the price of that transaction directly affects how much taxable profit each entity reports in its respective jurisdiction. Tax authorities around the world require these intercompany prices to reflect what unrelated parties would agree to in comparable circumstances — a concept known as the arm's length principle.
The arm's length principle, codified in Article 9 of the OECD Model Tax Convention, is the international standard for transfer pricing. It states that conditions between associated enterprises should not differ from those which would be made between independent enterprises in comparable transactions. When intercompany prices deviate from arm's length, one jurisdiction may be gaining tax revenue at the expense of another — a form of profit shifting that tax authorities actively scrutinize through transfer pricing audits.
The OECD Transfer Pricing Guidelines recognize five approved methods for determining arm's length prices. Our Transfer Pricing Methods guide explains each in detail with worked examples, covering the Comparable Uncontrolled Price (CUP) method, Resale Price Method, Cost Plus Method, Transactional Net Margin Method (TNMM), and Profit Split Method. The choice of method depends on the nature of the transaction, the availability of comparable data, and the functional analysis of the entities involved.
This transfer pricing calculator helps you benchmark your intercompany margins against OECD arm's length ranges. Select the transfer pricing method applicable to your transaction, enter the relevant financial data (revenue, cost base, or profit figures), and the tool will compare your reported margin against typical arm's length ranges. Results indicate whether your pricing falls within, below, or above the interquartile range — the standard benchmark used by most tax authorities.
Remember that transfer pricing compliance also requires robust documentation. Most jurisdictions now follow the OECD's three-tier documentation framework: a Master File describing the MNE group's global operations, a Local File detailing specific intercompany transactions in each jurisdiction, and Country-by-Country Reporting (CbCR) for groups with consolidated revenue above EUR 750 million. Penalties for non-compliance can be severe — in some countries reaching 100% to 200% of the tax shortfall.
For a comprehensive overview of all five methods with numerical examples, read our Transfer Pricing Methods Explained guide. If you are dealing with cross-border payments that also involve withholding tax, use our WHT Calculator to estimate the tax impact. For multinational groups subject to the global minimum tax, our BEPS Pillar Two Guide explains how transfer pricing interacts with the new GloBE rules. See our Glossary for definitions of key transfer pricing terms.