Do I need transfer pricing documentation? And where does doing it myself start to cost money?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: requirements differ: some jurisdictions ask for contemporaneous documentation as a penalty-protection condition, others impose a mandatory report regardless of value.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
We only have one intercompany invoice — do we still need documentation?
Possibly, and this is the assumption that catches small groups out. The question in most regimes is not how large the transaction was but whether a transaction with a related non-resident took place at all. Some jurisdictions require a report or a certification whenever there is any such transaction, with no value threshold at all. Others set a threshold but still ask, on an information return, whether documentation exists. A single management fee, a single loan or a single recharge is enough to put you inside the question, so the position is worth establishing rather than assuming.
Is there a size below which transfer-pricing documentation is not required?
There is no single answer, because the requirement is set country by country and the group has to satisfy each one separately. Some jurisdictions relieve smaller taxpayers from preparing a full study while leaving the arm's length obligation itself fully in place. Others impose a mandatory report or certification regardless of value. A group operating in several countries commonly finds it is exempt in one and squarely inside the rules in another for the same transaction. Check the requirement where each party to the transaction sits, not just where the head office is.
What does contemporaneous actually mean in practice?
It means the analysis existed at the time the price was set or the return was filed, rather than being written after a query arrived. Where documentation is a condition of penalty protection, preparing it late usually means the protection is lost even if the conclusion is right, because the condition was about timing. That is not a reason to skip preparing it late — an authority reviewing a price still has to be answered, and a well-supported analysis is better than none. It is a reason to prepare it on the return's own timetable, which is cheaper and worth more.
What happens if we tick no on the return asking about documentation?
You have put the answer on the record, which is the point of the question. Declaring that no documentation exists tells the authority, in advance and in your own words, that any price it examines is unsupported, and in regimes where documentation gives penalty protection you have confirmed that the protection does not apply. It is also an answer that is easy to cross-check against what the group files elsewhere. If the honest answer today is no, the useful response is to change the answer for the coming year rather than to reconsider the tick.
Does having documentation stop an adjustment being made?
No, and it is worth being clear about what it does do. Documentation does not make a price arm's length, and an authority that disagrees with the analysis can still adjust. What it changes is the nature of the discussion: the argument becomes about method, comparables and facts that you have already set out, rather than about why nothing was recorded. In many regimes it is also the condition for penalty protection, so the difference between having it and not having it can show up in the penalty long before it shows up in the tax.
Who prepares it, the parent or the local subsidiary?
Usually both, in different forms. Group-level material describing the business, the intangibles and the financing arrangements is normally prepared centrally, because only the parent has the whole picture. The local analysis of the particular transactions each entity enters into, tested against local requirements and filed on the local timetable, is the subsidiary's responsibility and cannot simply be a translated copy of the group document. The failure mode is a subsidiary that assumes head office has taken care of it, and head office that assumes the local team has covered the local requirement.
What is country-by-country reporting?
A report that the largest multinational groups file with their home authority, setting out revenue, profit, tax paid and accrued, capital, employees and tangible assets for every jurisdiction they operate in. It is exchanged between authorities and used for risk assessment, not to compute tax. Its effect on the ground is that inconsistency between the report, the local files and the statutory accounts is itself what draws attention. See our transfer pricing work.
What are the transfer pricing methods?
Five, in two groups. Three compare transactions: comparable uncontrolled price, resale price, and cost plus. Two compare profits: the transactional net margin method, and profit split. The OECD asks for the most appropriate method on the facts rather than a fixed hierarchy; the United States applies a best-method rule to similar effect. Selection is itself a documented judgment, and a method chosen without recording why is a weak position under audit. See our transfer pricing work.
