SystemTax Compliance & Tax Technology

Transfer Pricing Documentation

Transfer pricing documentation that tests every margin while it can still be fixed in the books

Every margin tested before the year closes, and every file ready inside 30 days.

See one case, screen by screen ↓
demo23tested partiestested at the Q3 close on actuals plus the Q4 forecast — 21 inside the range, 2 outside
demo€3.40Myear-end adjustment proposed for the German distributor, with clause, rule, arithmetic and side effects, to book in December
demo1,134rejectionsin one benchmark refresh, each with a recorded reason — a second agent re-checked 113
target0contradictionsopen between Master File, Local Files, agreements and the country-by-country report at sign-off
In short

What is Transfer Pricing Documentation?

Software that produces a group's transfer pricing documentation — the Master File and a Local File in each country — from its financials, intercompany agreements and benchmark studies. Transfer Pricing Documentation adds eight agents that interview business owners, refresh the comparables, test every margin before the year closes, draft every chapter with citations and check the files against each other, for the Transfer Pricing Director to decide and sign.

How to choose AI solutions for back-office and enterprise work →

Updated

The problem

Why the margin is found too late, and the files disagree

Groups that follow BEPS Action 13 keep a Master File, and a Local File in each country whose rules ask for one. Today the transfer pricing team rolls last year's Word files forward, e-mails business owners for weeks to write the functional analysis, refreshes the comparables by hand without writing down why companies were rejected, and tests margins in spreadsheets after the year has closed — when a margin outside the range can no longer be fixed in the books, only defended in an audit.

Nobody checks that the Master File, the Local Files, the signed intercompany agreements and the country-by-country report say the same thing: the Master File says a distributor bears no inventory risk while its agreement says it does, or the country report and the Local File give different headcounts. And the clock is short: since 1 January 2025 Germany wants the files within 30 days of an audit notice, with a surcharge of at least €100 a day after that.

typical30daysto hand over the files after a German audit notice (§90(4) AO)
typical€100a dayat least, for German files that are late (§162(4) AO)
Where a documentation cycle's working days goestimated
By hand73 days
With the solution17 days
  • Functional interviews and writing the functional analysis20 → 4 d
  • Segmented P&L per entity, mapped to the profit indicator5 → 1 d
  • Benchmark refresh, with a reason for every rejection10 → 3 d
  • Margin test and the year-end adjustment5 → 1 d
  • Drafting the Master File and the Local Files25 → 6 d
  • Reconciling files, agreements and the country report8 → 2 d

Estimated split of a transfer pricing team's working days for one year's Master File and Local Files at a mid-size group, by hand and with the solution.

How it works

How a year is documented

Eight agents interview owners, refresh benchmarks, test every margin, draft cited files and cross-check them; the TP Director decides and signs.

What comes in
Sources in7 systems · ledgers, forecast, agreements, comparables, owners
Agents at work
Interview agentowners' answers, cited
Financials agentactual + forecast
Then
Benchmark agenta reason for every rejection
Review agentre-checks a sample
Then
Margin test agentproposes the adjustment
Then
Drafting agentcited chapters
Consistency agentfiles agree
A person decides
Transfer Pricing Directorapproves, edits or rejects with a reason code
What comes out
Year-end adjustment
Master File and Local Files
Evidence pack
One case, step by step

One margin, from outside the range to a signed adjustment

Kestrel & Vane Group runs 46 entities in 30 countries, 214 controlled transactions and 23 tested parties. It is Wednesday 14 October 2026: Q3 is closed and the Q4 forecast is in. Here is how the Transfer Pricing Director works with the agents, screen by screen, in the working solution.

  1. 01Wednesday, 08:12

    The agents tell him what needs him, with sources

    Jonas Weber · Transfer Pricing Director

    Jonas opens Today. The agents have tested all 23 tested parties on Q3 actuals and the Q4 forecast: two are outside their range, 3 decisions need him this week and the German audit set is due Sun 1 Nov. Each agent writes what it found in plain sentences, every fact numbered to its source, with buttons to act on it.

    Margin test agent: “Arkon GmbH is outside its range: 1.2% against 2.1% – 4.6% … I propose a €3.40M year-end adjustment, booked in December.”

  2. 02The ranges

    Every tested party as a band, its margin as the dot

    Margin test agent

    Each band is a tested party's benchmark interquartile range, the tick its median, the dot its own margin on actual plus forecast. Arkon GmbH, the limited-risk distributor in Düsseldorf, sits red at 1.2% against 2.1% – 4.6%. Beside it are its functions, assets and risks; on the right, the agent's reasoning and the Local File chapter the band feeds.

    “Germany: outside the interquartile range, adjust to the median (§1(3a) AStG).”

  3. 03Why it is low

    The business owners already said why

    Interview agent

    The Interview agent sent short questionnaires in Microsoft Teams and e-mail. Marco Bellandi, General Manager EU Distribution, answered that the EU Pricing Committee in Eindhoven decided a 6% spring discount on the KV-300 range for April to June. Stefan Albrecht, Arkon's Managing Director, answered that Arkon applied the price list it was sent. The market risk sat with the principal.

    Marco Bellandi: “In April we decided a 6% spring discount for April to June to win share against the new competitor pumps. Arkon applied it; the decision was ours.”

  4. 04The functional analysis

    Every row cites the answer it rests on

    Interview agent · Ana Lindqvist, TP Analyst

    From those answers and the agreement, the agent drafted Arkon's functions, assets and risks: pricing within 3% of the list, the principal sets prices; market risk limited, borne by the principal. Ana Lindqvist accepted the rows on Tue 13 Oct. One row conflicts with the Master File — inventory risk — and is marked for a decision.

    The Interview agent never writes a row without an answer or a document to cite.

  5. 05The comparables

    1,148 companies screened, a reason for every rejection

    Benchmark agent · Review agent

    The Benchmark agent refreshed the EU distributors set: 1,148 screened, 14 accepted, 2023–2025 weighted, range 2.1% – 4.6%, median 3.0%. Every rejection has its reason — 402 not independent, 287 mainly manufacturing, 214 without enough data. The Review agent re-checked 113 rejections, agreed with 111 and sent the other two to a person.

    Review agent on Lindmark Fluid Supply AB: “Its 2025 report says 92% of revenue is resale.” Jonas decides whether it stays rejected.

  6. 06The proposal

    €3.40M to the median, and he asks what if

    Margin test agent

    The guided adjustment shows the result, the reasoning and the arithmetic: Arkon's €188.9M revenue and €2.27M operating profit, the median of 3.0%, and a credit note of €3.40M from Kestrel & Vane Pumps B.V. Clause 5.2 of ICA-DE-07 and the German rule both say median. Jonas asks in plain words what the lower quartile would mean.

    “The adjustment would be €1.70M … a lower point would need a written reason and invites a challenge. I recommend the median.”

  7. 07Before he decides

    Customs, VAT and the counterparty checked first

    Margin test agent · Consistency agent

    The agents check what the fix would break. Customs: the adjustment lowers the effective price of goods Arkon imported; Elif Durmaz, Customs Manager EU, is told. VAT: outside the scope of VAT under the group's position, cited. The Dutch principal's profit falls by the same amount, from €214.6M to €211.2M. No withholding tax. The German Local File §5.3 and §6 are redrafted the moment he decides.

    “Below €5M per importer and year the group claims no customs refund.”

  8. 0809:02

    He signs with the meaning and a reason code

    Jonas Weber · Transfer Pricing Director

    Jonas can approve, change the point in the range or reject. He approves. The dialog states what his signature means, takes the reason code “Agreement clause and country rule agree” and an optional comment, and signs with single sign-on and a second factor. Nothing is booked until he signs.

    “I approve a year-end adjustment of €3.40M to Arkon GmbH's FY2026 operating margin, to the median (3.0%) of the EU distributors' range, under ICA-DE-07 §5.2, as Transfer Pricing Director.”

  9. 09Seconds later

    The booking task goes to the controller

    The agents

    The signature is recorded and hash-chained to the audit trail. Katrin Hoffmeister, Arkon's Finance Controller, gets the booking task — credit note €3.40M, period 12, with the wording for VAT. The customs manager is told, the German Local File §5.3 and §6 are redrafted and cited to his decision, and the Dutch Local File gets the matching entry. After it, Arkon earns 3.0%, €5.67M.

  10. 1018 days to the audit

    Two contradictions still block the German file

    Consistency agent

    The Consistency agent read 90 documents and 412 statements and found 14 contradictions; 9 are resolved. C-01: the Master File says Arkon bears no inventory risk, ICA-DE-07 §3.4 says it bears obsolescence on stock over 180 days, and Stefan Albrecht confirms €0.4M written off. C-02: the country report counts 212 people, the Local File 198. Each comes with both passages, a proposed fix and the person who decides.

    The Consistency agent never closes a contradiction itself and never changes a signed document.

Who it’s for

Built for everyone who stands behind the files.

The same year's transfer pricing, seen by five of the people who carry it — what their year looked like, and what it looks like now.

JW
Jonas WeberTransfer Pricing Director · approves adjustments and benchmark sets
Transfer Pricing Director
Before
“Tell me in October, not in March, while I can still fix it in the books.” Learns of a margin outside the range after the year has closed.
Now
Sees all 23 tested parties against their ranges at the Q3 close, and decides each proposed adjustment on one screen with its clause, rule and side effects.
AL
Ana LindqvistTP Analyst · runs interviews, benchmarks, Local Files and the calendar
TP Analyst
Before
“Half my year is chasing answers I already had last year.” Writes the functional analysis by hand from e-mails.
Now
The Interview agent chases owners and drafts each row with its cited answer; she accepts, edits or rejects, and edits chapters by asking.
KH
Katrin HoffmeisterFinance Controller, Arkon GmbH · books the adjustment, faces the German auditor
Finance Controller, Arkon GmbH
Before
“If the auditor asks on Monday, I need the file by the end of the month, not a project.”
Now
Confirms the Q4 forecast the test runs on, gets the booking task with amount, period and counterparty, and has the German file drafted and cited.
RO
Rachel Osei-BrandtHead of Tax · signs the Master File, releases audit sets
Head of Tax
Before
“Same facts in every file, or none of them helps us.”
Now
Signs a Master File built from the same facts as the Local Files, with every contradiction decided, and shows who did what on the audit trail.
MB
Marco BellandiGeneral Manager, EU Distribution · business unit owner
General Manager, EU Distribution
Before
“Ask me five clear questions once. Not a forty-page form.”
Now
Answers six plain questions once; his answers become cited sources for the functional analysis.
Built on the engine

8 agents. Each with one job, and hard limits.

Eight agents interview owners, refresh benchmarks, test every margin, draft cited files and cross-check them; the TP Director decides and signs.

Interview agent

Sends short questionnaires to business owners, chases and follows up vague answers, and drafts the functional analysis citing their answers.

  • Sends only to the owner list
  • No functional analysis row without a cited answer or document
  • Escalates to the business unit owner after 15 days
Financials agent

Pulls segmented P&L per entity, actual and forecast, from SAP S/4HANA, Oracle Fusion and the group planning system, and maps it to each tested party's profit indicator.

  • Never writes to a ledger
  • Uses only forecasts confirmed by the local controller
Benchmark agent

Refreshes the comparables, applies the screens, records the reason for every rejection and computes the range by country rule.

  • Independence screen: rejects a company with a related owner above 25%
  • A range changes only with the TP Director's approval
Review agent

Re-reads a 10% sample of the rejections and the drafted chapters, and sends disagreements to a person.

  • Never overrules another agent
Margin test agent

Tests every tested party against its range and proposes year-end adjustments with the agreement clause, the country rule, the arithmetic and the customs, VAT and counterparty side effects.

  • Never books an entry
  • Downward adjustments always go to a person
  • Smaller than the €250k materiality: listed, not proposed
Drafting agent

Drafts the Master File and Local File chapters with every sentence cited, and makes edits asked for in conversation.

  • No fact without a source
  • Edits are proposals until a person accepts
Consistency agent

Reads the Master File, the Local Files, the agreements, the country-by-country report and the owners' answers against each other and raises contradictions with both passages and a fix.

  • Never changes a signed document
  • Never closes a contradiction itself
Calendar agent

Keeps the filing calendar and audit clocks per country, with reminders and escalations.

  • Never files anything
Transfer Pricing Director

Approves every adjustment; the Head of Tax signs and releases. The agents propose; a named person decides.

Ask in plain words

Ask the agents, in plain words

Ask about any tested party, file or deadline, or tell the agents what to do. Every answer is numbered to its source, and nothing changes until a person accepts it.

Why is Arkon low?

The EU Pricing Committee ran a 6% spring discount on the KV-300 range; Marco Bellandi confirms the decision was Eindhoven's and Stefan Albrecht that Arkon applied the list it was sent. Arkon's gross margin fell from 14.8% to 12.9%. The risk sat with the principal.

What if we use the lower quartile?

The adjustment would be €1.70M (2.1% − 1.2% of €188.9M). But ICA-DE-07 §5.2 says median and so does the German rule; a lower point would need a written reason and invites a challenge. I recommend the median.

What if the Q4 forecast is wrong?

If Q4 profit comes in at €0.55M instead of €0.74M, Arkon ends at 1.1% and the adjustment becomes €3.59M. I re-test after the November close and propose a top-up only if it moves by more than €0.25M, your materiality.

What blocks the German Local File?

Two open contradictions. C-01: the Master File says Arkon bears no inventory risk, but ICA-DE-07 §3.4 says it bears obsolescence on stock over 180 days, and Stefan Albrecht confirms a €0.4M write-off. C-02: headcount 212 in the country report against 198 in the Local File. I propose a fix for each; you decide.

Every screen

The working solution, as it ships.

13 screens from the working solution, on its sample data. Pick one to see it large.

TodayWhat needs the Transfer Pricing Director: tested parties, decisions, files drafted, the audit clock, and what each agent found, with sources.
Margin rangesEvery tested party as a band — its interquartile range, median and margin on actual plus forecast — with its functions, assets and risks and the Local File chapter it feeds.
Functional interviews38 short questionnaires with their status, and each owner's answers kept as numbered sources.
Functions, assets and risksThe drafted functional analysis for the tested party against the principal, every row cited to an answer or the agreement.
Benchmark studyFrom 1,148 companies to 14, a reason for every rejection, the range, and the two rejections the Review agent disagreed with.
The year-end adjustmentThe result, the reasoning, the arithmetic and the proposed credit note, with a conversation about this adjustment beside it.
Side effects, checked before you decideCustoms value, VAT, the counterparty, withholding tax and the Local File, each with its status and source.
Approve and signWhat the signature means, the reason code, a comment and the e-signature.
After the decisionSignature recorded, booking task sent to the controller, customs told, both Local Files updated.
Consistency checksContradictions across the Master File, Local Files, agreements, country report and answers, both passages side by side with a fix and a decider.
A cited Local FileThe German Local File in OECD Annex II structure, every sentence linked to its source, edited by asking the Drafting agent.
Audit trailEvery action by an agent or a person, hash-chained, with an evidence pack to export for a Local File or an audit set.
Your rulesCountry range rules and adjustment points, and the thresholds the agents work to.
Governance

Built for a transfer pricing audit: cited, signed, on the record.

Every sentence cites its sourceEvery agent statement and every drafted sentence links to its passage — the agreement clause, the owner's answer, the ledger extract, the benchmark study, the committee minutes.
Named people decideOnly the Transfer Pricing Director approves adjustments and benchmark sets; only the Head of Tax signs the Master File and releases the files for an audit. The agents propose.
Signed with a meaning and a reasonEvery approval states what the signature means and carries a reason code — such as “Agreement clause and country rule agree” or “Forecast not final” — and an e-signature with a second factor.
Agents never book or fileThe agents never book an entry, change a signed agreement, file anything, write to a ledger or send to anyone outside the owner list. Downward adjustments always go to a person.
Agents check each otherThe Review agent re-reads a sample of the Benchmark agent's rejections and the drafted chapters, and the Consistency agent checks every file against the agreements and the country report. Disagreements go to a person.
A hash-chained audit trailEvery action by an agent or a person is on the audit trail, each line chained to the one before, kept for 10 years; nothing can be edited or deleted. An evidence pack exports for a Local File or an audit set.
Configuration

Your country rules and thresholds, not ours

The range rule and adjustment point for each country, and the thresholds the agents work to, are settings. A rule change is a proposal the Transfer Pricing Director approves; every change needs a reason and is on the audit trail.

SettingDefaultChoose from
GermanyInterquartile range · outside it, adjust to the median (§1(3a) AStG)Interquartile range, 35th–65th percentile or full range · adjust to the median or the nearest quartile
India35th–65th percentile when 6 or more comparables · adjust to the medianA rule per country, and a group rule for every other country
Near an edge0.2 points0.1 · 0.2 · 0.3 points
Materiality for a proposal€250,000€100,000 · €250,000 · €500,000
Forecast cut-offQ3 close + 10 working daysQ3 close + 10 working days · November close
Comparables look-back3 years3 years · 5 years
Independence screen25%25% · 50% related owner
Review agent sample10%5% · 10% · 20%
Connections

Works with the systems the year already runs on

LedgersSAP S/4HANA and Oracle Fusion, segmented by entity, read-only
Group planning systemthe Q4 forecast, confirmed by each local controller
Intercompany agreements61 signed agreements from SharePoint, clauses indexed for citation
Comparables databaseyour licensed database, screened and re-screened each year
Microsoft Teams and e-mailquestionnaires to business owners, and their answers kept as sources
Country report and last year's filescountry-by-country report data, and last year's Master File and Local Files for roll-forward
What it changes

The difference, in numbers.

Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.

typical
30days
every file ready inside Germany's audit window (§90(4) AO)
30-day window
at least €100 a day after
estimated
€3.40M
year-end adjustment booked in December, not assessed in a later audit
Tested after year endtoo late
Tested at Q3booked
target
0
open contradictions across files, agreements and CbCR at sign-off
Found today14
Target0

“demo” = seen in the working solution, on its sample data · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures (§90(4) and §162(4) AO via Alvarez & Marsal, 2024 and 2025, and BDO — files within 30 days of a German audit notice, a surcharge of at least €100 a day after that; §1(3a) AStG and the BMF Administrative Principles 2024 on adjusting to the median). People, companies, entities and comparables named on this page are fictional — characters and sample data in the working solution.

Questions

What heads of tax and transfer pricing teams ask us.

What is transfer pricing documentation software?

Software that produces a group's transfer pricing documentation — the Master File and a Local File in each country — from its financials, intercompany agreements and benchmark studies. Transfer Pricing Documentation adds eight agents that interview business owners, refresh the comparables, test every margin before the year closes, draft every chapter with citations and check the files against each other, for the Transfer Pricing Director to decide and sign.

How does it test margins before year end?

At the Q3 close the Financials agent reads segmented P&L for every entity, actual and the confirmed Q4 forecast, and the Margin test agent compares each tested party with its benchmark range under its country's rule. A margin outside the range gets a proposed year-end adjustment with the agreement clause, the rule and the arithmetic, while it can still be booked.

Does it write the functional analysis?

The Interview agent sends each business owner a short questionnaire in Teams or e-mail, chases late answers and follows up vague ones. It drafts each functions, assets and risks row citing the answer it rests on; the TP Analyst accepts, edits or rejects every row, and a row that conflicts with another document goes to a decision.

How are benchmark rejections recorded?

The Benchmark agent records a reason for every rejected company — not independent, mainly manufacturing, not enough data, losses, different products or markets, R&D above 3% of sales. The Review agent re-reads a sample of rejections and sends any it disagrees with to a person, and the TP Director approves the set before it is used.

Does it check that the Master File, Local Files, agreements and CbCR agree?

Yes. The Consistency agent reads them all against each other, with the owners' answers, and raises each contradiction with both passages side by side, a proposed fix and the person who decides. A contradiction that blocks a file stops it from being signed.

Do people stay in control of adjustments and filings?

Yes. The agents propose and never book an entry, change a signed agreement or file anything. The Transfer Pricing Director approves, changes the point in the range or rejects each adjustment with a reason code and an e-signature, the controller books it, and the Head of Tax signs the Master File and releases the files for an audit.

Can we set our own country rules and thresholds?

Yes. The range rule and adjustment point for each country — the median in Germany, the 35th–65th percentile in India — and the near-edge margin, materiality, forecast cut-off, comparables look-back, independence screen and review sample are all settings. Changes need a reason and are on the audit trail.

How long does it take to go live?

The Agentic Solution Engine builds and deploys it from your requirements and documents — your transfer pricing policy, intercompany agreements, last year's files and entity list — and it goes live once every quality gate has passed. We will walk you through it on your own tested parties first.

See it on
your tested parties.

We'll run Transfer Pricing Documentation on last year's files, your agreements and a sample of your entity financials.