In order to perform the Transfer Pricing analysis and determine that the prices agreed by related companies are at market value, it is necessary to perform a comparability analysis. For this purpose, there are two types of comparables: Internal and External.

Internal comparables

When in the Transfer Pricing analysis we say that an internal comparable was used, we mean that the analyzed company carried out the same transaction with a related company and with an independent company. The information from internal comparables is the ideal information to use in an analysis, the easiest to obtain for the company and may even be the most direct and least complicated way to compare a transaction.

We will be able to make such comparisons in our analysis as long as the transactions are substantially comparable in terms of the following factors:

  1. Contractual terms
  2. Functional analysis
  3. Transaction characteristics
  4. Economic circumstances
  5. Business strategies.

If not, at least the necessary adjustments can be made to make the comparison as reliable as possible or the analysis cannot be performed with this type of comparables.

External comparables

When we talk about external comparables, we are going to make a comparison of the transaction carried out by the company under analysis with transactions carried out between independent companies. This type of analysis is more complicated because most of the information belongs to private companies.

However, for certain transactions it is possible to search for public information, such as central bank interest rates. For the rest of the information, private databases of specialized companies can be used:

  1. Amadeus: financial information of companies worldwide
  2. Sabi: financial information of companies in Spain and Portugal
  3. Royalty Range: royalty information and contracts
  4. TP Genie: financial information of companies in Europe.

One of the disadvantages of these comparables is that it requires much more time to search for the right ones. Not all the companies that you can find in the databases are comparable or do not have all the necessary information to be comparable.


It should be taken into account that internal comparables are ideal when performing a Transfer Pricing analysis. However, they do not always comply with the comparability factors.

For this reason, external comparables should not be discarded from an analysis. Their use is totally acceptable by the tax administrations, as long as they comply with all the established conditions and that, at the end of the day, it can be verified that the transactions carried out are at market value.

Juan Mosquera

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