Transfer pricing documentation


Transfer pricing documentation usually is required by law. This documentation must substantiate how the intercompany business is set up and evidencing that the intercompany pricing applied would have been applied between third parties as well. In many countries taxpayers are obliged to have transfer pricing documentation when a taxpayer performs intercompany transactions. Depending on the jurisdiction this documentation should be submitted annually, where in other countries this documentation should be submitted upon request of the tax authorities or sometimes taxpayers are required to prepare contemporaneous documentation. Having adequate transfer pricing documentation available helps to prevent companies being confronted with a shift of the burden of proof with respect to transfer pricing adjustments imposed by tax authorities, as well as double taxation. Moreover, non-compliance with transfer pricing documentation requirements can sometimes lead to penalties.


The OECD Guidelines do not provide for an exact content to be included in the transfer pricing documentation. They solely touch upon some specific topics that need to be covered in the transfer pricing documentation. In addition, the OECD Guidelines are considered to be soft law for the OECD member states, which means that it is only binding for the collective goal to be achieved. Countries are allowed to adopt specific national regulations regarding transfer documentation that can deviate from the OECD Guidelines. This is confirmed by common practice as the documentation that should be included varies from country to country. As such, it is quite hard to provide for an overview of exact content that needs to be provided.

However, as the most countries generally follow the OECD Guidelines, the following topics are typically covered in transfer pricing documentation:

TopicCan include
Description of the company and the group• Outline of the business
• Structure of the organization
• Legal ownership within the MNE Group
• Overview of financial key figures
Industry analysisDescription of:
• Competitors
• Market and trends
• Added values
• USPs
Overview of intercompany transactions The level of taxpayer’s transactions with related companies.
Functional analysis (functions, risks and assets)In transaction between related parties, compensation will reflect the functions that the parties perform taking into account risks assumed and assets used.
Selection of transfer pricing methodSelection of an appropriate method
Transaction vs. profit methods
Economic analysisApplication of selected method, e.g.:
• CUP analysis
• Benchmarking analysis
• Profit split analysis
ConclusionDefinition of arm’s-length range. Some countries accept prices to be at arm’s length if they fall within the range while other countries target the median. | the global transfer pricing reference guide