Multiple Roles of Transfer Prices: One vs. Two Books

  • Søren Bo Nielsen
  • Pascalis Raimondos-Møller
Part of the MPI Studies in Tax Law and Public Finance book series (MPISTUD, volume 1)


This paper investigates multiple roles of transfer prices for shipments of goods and services between entities of a multinational enterprise. At the center is the role of transfer pricing (TP) in tax manipulation, but other roles having to do with internal operations or strategic delegation, etc. are also considered. The interesting question is to what extent and how the different roles of TPs interfere with each other. The answer depends on whether companies use one or two books, i.e. whether they (can) apply different TPs for different purposes. We illustrate, in a stylized model, the competing aims of tax manipulation and strategic delegation. Finally, we briefly look at selected reform proposals, concluding that either TP problems are not addressed, or else new distortions will be introduced instead.


Transfer Price Strategic Delegation Formula Apportionment Optimal Transfer Price Transfer Price Problem 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  • Søren Bo Nielsen
    • 1
  • Pascalis Raimondos-Møller
    • 2
  1. 1.Department of EconomicsCopenhagen Business SchoolFrederiksberg CDenmark
  2. 2.Danish Research CouncilCopenhagenDenmark

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