Scaling SaaS videos: key transfer pricing considerations for growing tech businesses
In this short video, Vladimir Milic, Director of Transfer Pricing at Moore Kingston Smith, explains why transfer pricing is becoming increasingly important for SaaS and technology businesses as they scale, attract investment and prepare for future exits. What was once seen as a compliance exercise now has a direct impact on valuation, deal timelines and long‑term value protection.
For CFOs of fast‑growth SaaS businesses, particularly those that have passed Series A and are expanding internationally, transfer pricing deserves attention much earlier in the growth journey.
Why transfer pricing matters more for SaaS businesses
As SaaS businesses scale, their operating models change quickly. Teams become more international, sales structures evolve, and value is increasingly driven by intellectual property, data and platforms rather than physical assets.
This rapid growth often means tax and transfer pricing frameworks struggle to keep pace. Combined with increased scrutiny from HMRC and other tax authorities globally, transfer pricing can no longer be treated as a box‑ticking exercise. It now plays a meaningful role in how investors assess risk and value the business.
Investor scrutiny is increasing
One clear trend highlighted in the video is the growing focus on transfer pricing during funding rounds and transactions. Investors are paying closer attention to related‑party transactions, contractual alignment and how profits are allocated across the group.
Misalignment between how a SaaS business operates and how profits are allocated across the group can quickly become a red flag. In practice, this can slow deals down, create valuation challenges or lead to uncomfortable questions during due diligence.
For CFOs preparing for their next funding round, this often means transfer pricing issues surface at exactly the wrong time.
DEMPE and where SaaS value is really created
A recurring theme in tax authority audits is the focus on DEMPE functions (Development, Enhancement, Maintenance, Protection and Exploitation of intellectual property).
For SaaS businesses, these concepts go to the heart of the business model. Platforms, data analytics and product development teams are where value is created, and tax authorities are increasingly focused on where those activities actually take place.
Understanding where teams are located, what decisions they make and how they contribute to value creation is essential to building a defensible transfer pricing position.
Scaling internationally creates hidden risks
As SaaS businesses expand into new territories, sales structures often change. Local sales teams may begin to exercise more autonomy, sometimes concluding contracts in a way that may create permanent establishment risks.
In parallel, early‑stage support arrangements, such as providing overseas subsidiaries with free or under‑priced access to IP, can become inappropriate as those teams reach maturity. Failing to revisit these arrangements can distort profit allocation and attract unwanted scrutiny.
SaaS transfer pricing needs to evolve as the business grows, not remain fixed at an early‑stage operating model.
IP migration: a major trigger event
One of the most significant risks discussed in the video is intellectual property migration. As businesses scale internationally, some consider moving IP out of the UK to support global growth.
HMRC typically views IP migration as a significant tax event and a potential erosion of the UK tax base. Exit charges and valuation challenges are common where this is not carefully planned and supported.
For CFOs considering structural changes ahead of exit or further fundraising, early advice is critical.
What CFOs should prioritise now
When asked what CFOs should focus on first, the answer is clear: ensure a robust and supportable transfer pricing policy is in place.
A well‑designed policy should:
- Map where value is created across the group
- Align profit allocation with DEMPE activity
- Reflect commercial reality in intercompany agreements
- Support investor discussions and regulatory engagement
Importantly, transfer pricing for SaaS businesses should be treated as a live framework, reviewed regularly as products, markets and pricing models evolve.
Transfer pricing as a value protection tool
For growing SaaS businesses, transfer pricing plays a broader strategic role. A strong framework helps smooth investor conversations, reduces deal friction and protects long‑term business and IP value.
Transfer pricing underpins funding outcomes, deal timelines and exit readiness. Addressing it early allows CFOs to stay in control, rather than responding reactively under pressure.
How Moore Kingston Smith supports SaaS CFOs
Moore Kingston Smith works with SaaS CFOs at every stage of growth, from early policy design through to transaction support and post‑deal integration. Our transfer pricing specialists collaborate closely with technology sector, tax and corporate finance teams to ensure frameworks are commercially grounded, scalable and investor‑ready.
If your SaaS business is expanding internationally, preparing for a funding round or thinking ahead to exit, now is the right time to review your transfer pricing position.
Get in touch with Vladimir Milic and the Moore Kingston Smith transfer pricing team to discuss how a proportionate, future‑proof approach can protect value and support your long‑term growth plans.
