Unveil trends in transfer pricing

Over the past years, the transfer pricing space has witnessed significant changes that are having far-reaching effects on the Asset Management industry supply chain and tax exposures.

In light of this, KPMG Luxembourg is pleased to introduce the first edition of our Transfer Pricing Asset Management Survey. We hope that this survey will prove to be a valuable resource, providing insights on how asset managers deal with transfer pricing. We trust that the data and insights offered will be an asset to readers as they work to enhance their organization’s transfer pricing compliance, audit savviness and preparedness.

We would also like to thank all the participants in this inaugural edition of the survey for their valuable contributions and openness.

  • 85%

    of respondents have implemented transfer pricing policies for all intercompany transactions

  • 60%

    of these policies undergo annual review

  • >50%

    chose the profit split method for portfolio management and distribution

  • 53%

    had a transfer pricing audit over the past five years

  • 50%

    of respondents have gone through a restructuring in the last 5 years

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A snapshot of survey respondents

Findings on transfer pricing policies and documentation

Databases used for benchmarking analyses

Asset management transactions

Financing transactions

Intra-group services

Intellectual property

Transfer pricing models

Distribution, sales and marketing section


Based on our findings, there is a prevailing trend towards the utilization of fee split as the TP model to remunerate the distribution function within traditional funds.

The testing of the fee splits generally involves a combination of internal and external comparable uncontrolled price (‘CUP’) methods. Moreover, the survey results indicate that both internal and external CUP-based fee splits are equally favored within this context.

More than half of the respondents have reported utilizing fee split or profit split as the chosen TP model to remunerate the different entities within the distribution function. Typically, these approaches are utilized to split the global distribution fee among the business units performing the distribution (or sales and marketing) function, as opposed to splitting the total management fee into its components (e.g., distribution, portfolio management, administrative functions, etc.).

Alternative investments

In alternative investments, the fundraising and investor relationship function is extremely rarely remunerated on a stand- alone basis. Among the respondents, we observed its incorporation into residual profits flowing to entities of the group performing portfolio management, including the investment committees, senior executives and founders of the groups.

Sales and marketing

According to our findings, sales and marketing functions are commonly managed in the EU by branches of the management company in the local jurisdictions. As many as 70% of the surveyed respondents with branches reported that their branches were engaged in distribution or sales and marketing functions.

Typically, standard sales and marketing activities still receive remuneration based on a cost-plus basis, reflecting the rather routine nature of these functions. The mark-up over cost for sales and marketing functions typically ranges between 5% and 15%, with the median mark-up at 10%.

Investment advisory and portfolio management

Portfolio management

According to the survey, more than half of the respondents opt for the profit split method, while nearly a quarter utilizes the fee split approach. Additionally, there is a notable presence of the external CUP method, whereas the internal CUP and cost-plus methods show comparatively smaller usage. These patterns seem to underline the perception of many asset managers that the portfolio function holds the central value within their value chain, attracting the primary share of generated profit/loss.

More than half of the respondents have reported using the profit split method as the chosen TP model for the portfolio management function.

Common profit split mechanisms encountered during the survey included:

  • Location of Investment Committee Members
  • Portfolio management teams’ general headcount per jurisdiction
  • Costs of portfolio management team’s business units.

The residual profit split is frequently employed as the TP model for portfolio management, involving remuneration for entities using a cost-plus model, with the remaining profit directed towards the portfolio manager or mix of portfolio management teams.

Investment advisory

The survey indicates a prevailing pattern in the use of the cost-plus model as the primary TP model for compensating investment advisory services. Nearly 70% of respondents favor this remuneration model. Notably, almost 30% of respondents opt for a combination of profit split and fee split methods, documented via the use of CUP analyses.

Nearly 70% of the respondents have reported utilizing the cost-plus method as the chosen TP model for their investment advisory function.

Management company and back-office


The survey findings on TP models for compensating the back-office function showcase a significant majority favoring the cost-plus method. The mark-up over cost for administrative functions typically ranges from 5% to 10%, with the median mark-up at 7.75%. The high prevalence of the cost-plus model as a remuneration method can probably be attributed to the fact that administration is not perceived as a key value driver within the asset management value chain. Instead, similarly to the management company, it is seen to have more of a facilitating role.

Nearly two-thirds of the respondents have reported using the cost-plus method as the chosen TP model for their administrative function.

Management company

Based on our findings, a prevalent trend emerges in the use of the cost- plus method as the primary TP model to remunerate the management company function, with nearly half of the respondents favoring this model. Additionally, it's worth noting that for the remaining models, the majority of respondents resort to using external CUP benchmarks. Neither in the management company nor in the administration functions have we observed instances where internal CUPs are used for establishing the remuneration model of these functions.

Nearly half of the respondents have reported using the cost-plus method as the chosen TP model for the management company function.

Transfer pricing audits

General overview

Over the past 5 years, 53% of the respondents had a TP audit , with 83% of these audits successfully settled. No relationship has emerged between the AuM and the occurrence of a TP audit.

Real estate groups experience a higher audit frequency, accounting for 53% of TP audits.

According to the survey results, 76% of the respondents who faced TP audits were audited by the German tax authorities.

Settlements and criminal procedures

  • 83%

    of the respondents that were audited have negotiated a settlement with the tax authorities.

  • 60%

    of the settlements, approximately, were achieved in under a year.

  • Criminal procedures


    of the respondents have been subject to criminal procedures.

The criminal procedures faced by the respondents were initiated by the Italian tax authorities and were ultimately dropped after settlement.

Business restructurings

Business restructuring refers to the cross-border reorganization of the commercial or financial relations between associated enterprises, including the termination or substantial renegotiation of existing arrangements. 54% of the interviewees have undertaken business restructuring(s) in the past 5 years. 19% of businesses undergoing restructuring paid exit charges further to the business restructuring.

Nearly 47% of the respondents who undertook business restructurings identified Brexit or other regulatory constraints as the driving force behind their business restructurings. Meanwhile, around 27% cited cost or resource optimization as the primary motivation behind the restructurings.

Advanced pricing agreements (‘APAs’) and mutual agreement procedures (‘MAPs’)

APAs and MAPs offer greater tax certainty to both taxpayers and tax administrations where different parts of the same transaction or arrangement involving a multinational enterprise are covered by multiple bilateral tax treaties.

Explore additional transfer pricing aspects

Intellectual property

Transfer pricing aspects in relation to intellectual property

19%of the respondents have IP developed in the group.

25%of the respondents possessing IP within the group indicated that the IP owner charges the group entities for the use of its IP.

Location of IP

Among the respondents with IP developed within the group, the IP was owned in and licensed from the United States, Singapore, Belgium and Luxembourg.

Carried interest

Transfer pricing aspects in relation to carried interest

0%of the respondents have considered transfer pricing when structuring carried interest.

58%of the respondents managing alternative investment funds stated that they had structured carried interest.

Additional ROI or performance fee?

Half of the respondents paying carried interest perceive it as an additional ROI, while 29% view it as an additional performance fee. Moreover, 21% of respondents consider it to encompass elements of both ROI and a performance fee.


ESG adjustments to transfer pricing policy

Within TP, we examine the value drivers within a group to appropriately attribute remuneration to each function, risk and asset. ESG regulations have clearly compelled asset managers to address the topic, alongside which the consideration of transfer pricing becomes essential.

25% of the participants said they have ESG considerations on their radar but have not made concrete adjustments to their TP policy to accommodate or quantify the ESG value added.

28% of the respondents have considered the TP implications on ESG initiatives driven by the investment group.

Survey results indicate that only 8% of the interviewees keep track of the cost and benefits created by the ESG initiatives.

Meet our team

Sophie Boulanger

Sophie Boulanger

Partner, Transfer Pricing
KPMG Luxembourg

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Laureen Tardy

Laureen Tardy

Partner, Transfer Pricing
KPMG Luxembourg

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Filip Vukovic

Filip Vukovic

Partner, Tranfer Pricing
KPMG Luxembourg

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If you would like someone to take you through the survey results in detail, or for any further queries, please contact us. Our experts can assist you in transfer pricing planning and documentation, country-by-country reporting, dispute resolution, operational transfer pricing, substance review and value chain analysis.