Are companies prepared to manage transfer pricing?
Transfer Pricing exposure is now the rule, not the exception, yet most companies still can’t produce a documented policy to prove it.
We strive to build closer relationships with our customers and better understand their TP needs. Creating synergies.
Acting early always costs less than fixing it under audit. The best-prepared companies are simply the ones that decided before the inspector did.
Most companies benchmark against assumptions, not evidence. This study gives leadership teams in Europe and Latam a tangible, comparable picture of where they stand.
Why transfer pricing remains a top tax agenda item
When a company buys or sells between its own divisions across borders, tax authorities require it to price those deals fairly, as if dealing with a stranger, not a sister company.
- BEPS and BEPS 2.0 keep raising the bar on intragroup pricing scrutiny.
- Tax authorities now exchange information routinely, closing gaps that used to hide inconsistent related-party pricing.
- Documentation requirements keep expanding, with steeper penalties for noncompliance.
- 94% of European respondents confirm TP exposure
- 93% of Latam respondents confirm TP exposure
Who we surveyed
A broad, cross-industry sample across two regions
The study is based on two independent samples from Europe and Latin America, both representing a broad mix of industries. No single sector dominates either region.
In Europe, Services represent the largest sector, accounting for 39% of respondents, followed by Other sectors at 24%. The remaining 37% is distributed across Industry, Financial Services and Technology.
In Latin America, Industry is the largest sector, representing 44% of respondents, followed by Services at 33%. The remaining 24% comprises Other sectors, Financial Services and Technology.
In Latin America, respondents are primarily concentrated in Mexico, with additional representation from Guatemala, Costa Rica and other countries in the region. The European sample includes respondents from several countries.
All participating companies conduct cross-border intragroup transactions and operate subsidiaries in multiple countries. The study therefore focuses on multinational businesses rather than companies operating exclusively in domestic markets.
Uneven and, on average, insufficient
Transfer Pricing awareness measures how well a company understands and follows the applicable TP rules, rather than simply whether it is familiar with them.
- Europe averages 58.9
- Latam averages 54.2
Three choices separate exposed companies from prepared ones
Two companies can look identical on paper, same size, same industry, same country, and still sit in very different risk categories.
The analysis suggests that awareness levels are not strongly associated with geographical location, industry or company size, measured by the number of countries in which a company operates subsidiaries. Average awareness scores were 58.9 in Europe and 54.2 in Latin America, while the correlation with geographical presence was very weak (r = -0.06).
What actually tells them apart is whether they have made three specific choices:
- Having a documented Transfer Pricing (TP) policy. Companies with a documented policy achieve an average awareness score of 76, compared to just 39 among those without one.
- Having dedicated internal TP resources. Companies with specialized internal resources reach an average awareness score of 77, versus 43 for those without them.
- Having previous experience with TP audits. Companies that have undergone a TP audit report an average awareness score of 76, compared to 51 among those with no prior audit experience.
Heavy reliance on external advisors, light on in-house capacity
The vast majority of companies rely on external advisors for transfer pricing (TP), with 87% in Europe and 89% in Latin America. However, only 39% of European companies and 42% of Latin American companies have specialized internal TP resources.
Relying on external advisors does not automatically translate into greater TP awareness. Occasional advisory support provides only a marginal improvement compared to having no external support, while sustained, recurring engagement is associated with significantly higher awareness levels.
The 5 numbers that say the most about the market today
No documented TP policy, despite confirmed exposure: Europe 53% · Latam 56%
Rely on external advisors, but few have internal resources: Europe 87%/39% · Latam 89%/42%
Do not know if they can access APA/MAP mechanisms: Europe 33% · Latam 29%
Companies with previous TP audit experience show higher awareness scores (+27 points in Europe and +24 in Latin America), although only 33% of European respondents and 13% of Latin American respondents have undergone an audit.
Feeling at risk does not mean being prepared, perception barely tracks reality in either region.
From awareness to action: what should change starting now
Short-term
• Review & formalize the TP policy
• Validate documentation (Local File / Master File / CbCR)
• Map & test existing intragroup transactions
• Check consistency between written policy and actual practice
Medium-term
• Assess access to APA/MAP mechanisms
• Strengthen evidence-retention processes
• Invest in internal capability building
• Proactively prepare for a potential audit
Delaying these actions may increase a company's exposure to Transfer Pricing risks. Taking preventive measures can help reduce the costs and complications associated with addressing compliance issues during a tax audit.
Key messages & takeaways
Exposure to Transfer Pricing obligations is now almost universal. The question is not whether companies are subject to these obligations, but how well prepared they are.
More than half of the companies subject to these obligations still lack a formally documented Transfer Pricing policy.
Self-declared knowledge is a poor predictor of real maturity: confidence is not compliance.
The level of Transfer Pricing readiness depends on management and governance decisions, not on a company's geographical location, sector or size.
Early preparation is systematically cheaper than reactive correction under audit.
What to validate today
The following eight questions can help companies assess their Transfer Pricing readiness and identify potential areas for improvement, particularly when documented policies or dedicated internal resources are lacking.
☐ Is there a documented, up-to-date Transfer Pricing policy in place?
☐ Has a functional analysis (FAR) been performed recently?
☐ Are valid intragroup contracts in place?
☐ Are there dedicated internal Transfer Pricing resources?
☐ Are internal Transfer Pricing risk controls in place?
☐ Is there a process in place to retain supporting documentation for intragroup services?
☐ Are APA/MAP mechanisms understood or being assessed?
☐ Has the company ever simulated or undergone a Transfer Pricing audit?
Act before the risk materializes
1 in 3 companies sit in the lowest awareness tercile. Over half have no documented Transfer Pricing policy.
Nearly 9 in 10 depend on external advisors without matching internal capacity.
Start with the readiness checklist and talk to us about a Transfer Pricing diagnostic.
Related content
