# Transfer Pricing

*Taxes — Finicade finance glossary*

Transfer pricing sets the prices charged between subsidiaries of one multinational — and those prices decide which country the profit is taxed in.

Transfer pricing sets the prices charged between subsidiaries of the same multinational, and because those prices decide where profit lands, they decide where tax is paid. Rules require an arm's length price, but intangibles like brands and patents have no market comparison, which is exactly where profit is shifted. It's the single largest battleground in international corporate taxation.

**Also known as:** arm's length principle, intercompany pricing

**Related terms:** [Tax Haven](https://finicade.com/glossary/tax-haven), [Corporate Tax Rate](https://finicade.com/glossary/corporate-tax-rate), [Double Taxation](https://finicade.com/glossary/double-taxation), [Tax Treaty](https://finicade.com/glossary/tax-treaty), [Tax Avoidance vs Tax Evasion](https://finicade.com/glossary/tax-avoidance-vs-tax-evasion)

Source: https://finicade.com/glossary/transfer-pricing