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 ↓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.
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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.
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.
Eight agents interview owners, refresh benchmarks, test every margin, draft cited files and cross-check them; the TP Director decides and signs.
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.
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.”
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).”
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.”
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.
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.
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.”
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.”
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.”
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.
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.
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.
Eight agents interview owners, refresh benchmarks, test every margin, draft cited files and cross-check them; the TP Director decides and signs.
Sends short questionnaires to business owners, chases and follows up vague answers, and drafts the functional analysis citing their answers.
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.
Refreshes the comparables, applies the screens, records the reason for every rejection and computes the range by country rule.
Re-reads a 10% sample of the rejections and the drafted chapters, and sends disagreements to a person.
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.
Drafts the Master File and Local File chapters with every sentence cited, and makes edits asked for in conversation.
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.
Keeps the filing calendar and audit clocks per country, with reminders and escalations.
Approves every adjustment; the Head of Tax signs and releases. The agents propose; a named person decides.
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.
13 screens from the working solution, on its sample data. Pick one to see it large.
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.
| Setting | Default | Choose from |
|---|---|---|
| Germany | Interquartile 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 |
| India | 35th–65th percentile when 6 or more comparables · adjust to the median | A rule per country, and a group rule for every other country |
| Near an edge | 0.2 points | 0.1 · 0.2 · 0.3 points |
| Materiality for a proposal | €250,000 | €100,000 · €250,000 · €500,000 |
| Forecast cut-off | Q3 close + 10 working days | Q3 close + 10 working days · November close |
| Comparables look-back | 3 years | 3 years · 5 years |
| Independence screen | 25% | 25% · 50% related owner |
| Review agent sample | 10% | 5% · 10% · 20% |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“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.
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.
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.
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.
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.
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.
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.
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.
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.
Every country tested, every field traced, the return ready months before the deadline.
1-min demoE-Invoicing ComplianceEvery invoice checked before it leaves, and every rejection fixed the same day.
1-min demoTax Provision AutomationEvery rate reconciliation line tested against the 5% rule, tied to its workpaper.
1-min demoWe'll run Transfer Pricing Documentation on last year's files, your agreements and a sample of your entity financials.