The master file describes the group. The local file describes one entity's transactions. The master file covers structure, business drivers, intangibles, intercompany financing and financial positions, so it is the document that says where the group considers its value to be created. The local file then has to show that the entity's own numbers are consistent with that description. Reading them as two chapters of one document is the right instinct, because they are read that way by the authorities that receive them, and the risk sits in the join rather than in either document alone.
Do I need a master file?
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It covers structure, business drivers, intangibles, intercompany financing and financial positions. The requirement usually turns on whether a transaction happened at all, not on how large it was.
Whether you need it
It covers structure, business drivers, intangibles, intercompany financing and financial positions. Its usefulness is consistency: a local file that contradicts it invites exactly the enquiry the documentation was meant to prevent.

The exception
The master file describes the group, not the transaction — and because it is filed in multiple countries, every authority reads the same description of where the group says its value is created.
Where to go from here
The full treatment — who it binds, the deadline, the penalty and the fixed fee — is on Master file. If that describes your position, the next step is a short call — not a form.
Reviewed against current guidance for the 2025 and 2026 filing seasons by Udit Gupta, International Tax, Cross-Border Tax & Transfer Pricing Expert, Legal Quotient Consultants. General guidance only. Your own facts decide the answer, so bring them to a call before relying on this.
Cross-border tax case studies
Master file prepared abroad and reconciled with the local entity file
The group's master file had been written by the parent's advisers and arrived as a finished document shortly before the local filing was due. Read against the local file, its description of the local entity did not match the functions the local team actually performed. Work consisted of mapping the group description against the local functional analysis, identifying the points of difference, and taking them back to the parent. The engagement produced a reconciled pair of documents filed together and a written record of the differences that had been raised and resolved before submission.
Read how this one runsGroup restructure described before the documentation was updated
A reorganisation had moved several operating entities under a new intermediate holding company partway through the year. The existing master file described the old structure accurately and the new one not at all. The work was chronological: establishing what changed, when, and which entities carried which functions on either side of the change. The engagement produced a structure section describing both periods and the transition between them, a revised description of the business drivers, and a note of which local files needed matching amendments before anything was filed.
Read how this one runsIntangibles section rewritten to match where development actually happened
The intangibles section described development as sitting with the parent while payroll and project records showed a substantial share of the engineering effort in two other entities. Because the same description is filed in several countries, that mismatch was the most exposed part of the document. Work consisted of interviewing the development leads, reading the project records, and rewriting the section from what they showed. The engagement produced a description of the intangibles and their development that the group's own records support, and a list of the local files that had to be brought into line.
Read how this one runsIntercompany financing arrangements documented across the group
Loans, cash pooling and an intercompany credit support arrangement had grown up over several years between entities in different countries, with no single description of any of them. The master file's financing section had to explain the arrangements before any local file could price them. Work consisted of collecting the agreements, establishing which were documented and which were only ledger entries, and describing the resulting financing structure. The engagement produced a financing section built from the agreements themselves and a schedule identifying the arrangements that had no written terms at all.
Read how this one runsLocal file contradicting the group description corrected before filing
Two documents were ready to file in the same week and had been prepared by different teams. The local file treated the local entity as a full-risk distributor while the master file described it as a limited-risk one. Either description could be defended; both together could not. Work consisted of testing which matched the contracts and the conduct, and amending the other. The engagement produced one consistent account of the entity's functions and risks across both documents, and a reconciliation note explaining the change that had been made and why.
Read how this one runsFirst master file for a group expanding into a second jurisdiction
The group had operated in one country and had just established an operating entity abroad, so documentation was a new obligation rather than an annual refresh. Work began with the group itself: structure, what drives the business, where intangibles sit, how the entities are financed, and the financial positions. The engagement produced a first master file drafted from those facts, a description of the new entity consistent with the agreements that had just been signed, and a short procedure for the group to follow when the file is updated next year.
Read how this one runsA Home Kept in Canada After the Move Abroad
A dwelling left available is the tie the CRA weighs most heavily, and its treatment differs depending on whether it is rented at arm's length. The file settles the residence position first and the rental reporting second.
Read how this one runsExpanding Abroad — Branch or Subsidiary, Decided on the Numbers
The choice sets the tax on profits, the treatment of early losses, and what it costs to take money home later. The file models all three across the first years rather than deciding on the incorporation cost alone.
Read how this one runsAll case studies — every published engagement in one place.
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Working from anywhere doesn't mean taxed nowhere: residency defaults, employer payroll exposure and treaty relief decide where income actually lands.
Working from another country does not by itself end tax residence in the one you left, and it can start one where you are sitting. Day counts, ties, the employer's own exposure and the treaty tie-breaker all point at the same question, and the year you move is the year it has to be answered on paper.
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Asked next about Master file
It is a group document, and the workable approach is to prepare it once, centrally, then have it reviewed by the people who will have to stand behind it locally. The reason is that the same description is filed in multiple countries, so every authority reads one account of where the group says value is created. Different local teams writing their own version of the group story is how contradictions enter. Central drafting with local review also surfaces the places where the description no longer matches what a particular entity actually does, which is precisely what wants finding before filing rather than afterwards.
Yes, and that is the point of it. Because it is filed in multiple countries, every authority reads the same description of the group. A version that emphasises development work in one jurisdiction and a version that emphasises it elsewhere are not two presentations of a single business, they are a contradiction with your name on both copies. Keep one controlled text, record which entities filed which version and when, and treat any local edit as a change to the group document rather than a local convenience.
The master file is not sized to the transaction, it describes the group, so small volumes do not by themselves put you outside the documentation. Whether the obligation bites is a question about your group and the jurisdictions it sits in, and it is answered from the rules that apply to those places rather than from the size of a single charge. What is worth separating out is the usefulness question. Even where the file is not required, a short controlled description of the group is what keeps the local files from contradicting one another.
It invites exactly the enquiry the documentation was meant to prevent. An auditor who reads both and finds the group claiming that development sits in one place while the local file treats the local entity as the developer now has a reason to look further, and the first thing examined will be the inconsistency rather than the underlying pricing. The fix is procedural. Before either document is filed, read them against each other in the same sitting and reconcile the functional descriptions, so that the account of who does what is one account.
Whenever the group it describes changes, which in practice means on a restructure, an acquisition, a change in how intangibles are held or a change in intercompany financing, as well as on the ordinary annual refresh of the financial positions. The failure mode is a file that is technically current but describes a group that no longer exists, because the narrative sections were carried forward while only the numbers were updated. Read the structure, intangibles and financing sections against this year's facts each cycle, not just the financial data.
It evidences that your related-party pricing sits within the range independent parties achieve. The work is comparison: identify companies or transactions genuinely similar in function, risk and assets, compute their margins, and show where your result falls against that range. Done before the filing deadline it supports the position; produced afterwards under audit it carries far less weight. See benchmarking study.
Comparable uncontrolled price. You find the price charged in a comparable transaction between unrelated parties and test your intercompany price against it. It is the most direct of the methods and the most persuasive when it fits, because it compares like with like at the transaction level. Its limit is data: close comparables exist for commodities and standard products, rarely for bespoke services or unique intangibles, which is where the margin-based methods take over. See our transfer pricing work.



