The glossary to understand and take action

Transfer pricing

Transfer pricing concerns the terms of transactions between related companies and their assessment under the arm's length principle.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

The analysis concerns the functions, assets, risks and facts of the transaction. An intra-group agreement or a standard margin alone is not sufficient to justify the remuneration.

In your file

What this changes in practice

Transfer pricing concerns the terms of transactions between related companies. The analysis must cover the functions performed, assets used and risks assumed, and then justify the method and comparability factors selected. An intra-group agreement and an invoice alone do not demonstrate that the price is appropriate. Documentation must remain consistent with the parties' actual conduct and be reviewed when the business changes.

A scenario to help you understand

Educational example

One company invoices administrative services to another company in the group. It documents the actual services, the beneficiaries and the calculation method, rather than arbitrarily allocating an overall amount.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Cartographier les transactions liées
  • Préparer l’analyse fonctionnelle
  • Justifier méthode, données et révisions

The practical question

Find out more

Une convention intragroupe suffit-elle à justifier un prix ?

Le contrat est une pièce importante, mais le prix doit être cohérent avec les fonctions, actifs et risques réellement assumés et la méthode retenue. Documentez les prestations et la logique économique. Un pourcentage copié d’un autre dossier peut être inadapté. La documentation doit pouvoir expliquer le calcul et les éventuels changements lorsque l’activité du groupe évolue.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

Functional analysisAn examination of the activities, resources and risks of the parties to a transaction, in particular to prepare a transfer pricing analysis.Shareholder current accountThe shareholder current account records sums due between the company and a shareholder according to the relevant transactions and agreements.Tax adviceTax advice consists of analysing the tax consequences of a situation and explaining the applicable options and obligations.ATAD DirectivesThe ATAD Directives constitute a European framework of measures against certain tax avoidance practices, transposed into national legislation.DAC6 — cross-border arrangementsDAC6 provides for the reporting of certain cross-border arrangements meeting the criteria set out in its legal framework.Pillar 2 — effective minimum taxationPillar 2 establishes effective minimum taxation for groups within its scope, according to specific calculation and reporting rules.

Put it into practice

Explore further with our guides

Practical guideSOPARFI in Luxembourg: how it works, obligations and points to watchPractical guideShareholder current account: documenting advances and repaymentsPractical guideTransfer pricing: documenting intra-group transactionsPractical guideIntra-group financing: documenting loans and interest

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.