transfer pricing

Definition

The prices charged between subsidiaries of the same multinational corporation for goods or services, theoretically based on arm's-length principles but conveniently used to shift profits to low-tax jurisdictions. Tax authorities are not amused.

Example Usage

The tech company's Irish subsidiary charged the U.S. parent enormous royalties for intellectual property, using transfer pricing to move profits offshore.

Origin

International tax terminology addressing cross-border intra-company transactions.

Fun Fact

Transfer pricing disputes represent the largest source of tax controversy worldwide, with billions at stake in determining what constitutes a 'fair' price between related parties.

Source: OECD Transfer Pricing Guidelines

Related Terms

Intermediate

Due Diligence

The period where you pretend to be a detective, an engineer, and an accountant all at once to figure out if a property is a goldmine or a money pit. Spoiler: it's usually somewhere between "fine" and "oh no."

💰 Finance / Accounting🏠 Real Estate🚀 Startup / VC

Intermediate

tangible book value

A company's book value after stripping out intangible assets like goodwill and patents—basically what's left if you only count things you can drop on your foot. It's the pessimist's version of book value that assumes intangibles are worthless.

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Beginner

brokerage

A firm that acts as the middleman between buyers and sellers, taking a nice cut of every transaction for the privilege of connecting people who could probably find each other on Craigslist. These companies facilitate trades in stocks, real estate, insurance, or commodities, providing expertise and access to markets in exchange for commissions. They're the reason why 'free' trading apps still somehow make billions.

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Advanced

receivership

The financial equivalent of calling in a responsible adult when you've made a complete mess of things—a court-appointed receiver takes control of a failing company to salvage whatever value remains for creditors. It's bankruptcy's slightly less dramatic cousin, where someone competent temporarily runs your business while you watch from the sidelines. Usually signals that things have gone very, very wrong.

💰 Finance / Accounting

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management carve-out

When executives negotiate a special deal ensuring they get paid even if the company fails and everyone else gets screwed. Because apparently captains should abandon ship with golden parachutes.

💰 Finance / Accounting

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perpetual inventory

An inventory tracking system that continuously updates quantities with each transaction in real-time, as opposed to counting everything periodically and hoping nothing walked away. It requires technology, discipline, and faith that employees actually scan items.

💰 Finance / Accounting

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