OECD Masterfile Studies

Altus Economics can assist companies operating in countries belonging to the OECD, including Europe and other locations, by drafting transfer pricing documentation under the ‘masterfile’ approach, which is outlined below.

In 2006, the European Council approved the Transfer Pricing Documentation Code of Conduct as proposed by the European Commission. The Code of Conduct encourages member states to implement the EU Transfer Pricing Documentation (EU TPD) approach. The EU TPD is designed to cover all group entities resident in the EU and transactions between them, as well as their transactions with group entities resident outside the EU. Taxpayers can minimize the risk of a transfer pricing penalty if they maintain the following two elements:

• a ‘masterfile’ of standardised information applicable to the overall enterprise
• ‘country-specific’ versions of standardised documentation for each OECD member state in which the taxpayer has related party transactions, including any documents relevant for that country only

The ‘masterfile’ approach provides a number of distinct benefits:

• Cost effective means of limiting risk of penalties or double taxation
• Reduced documentation costs by eliminating duplicate collection efforts
• Allows for use of consistent transfer pricing methods
• Allows management to readily compare the performance of group companies
• Allows for a risk based approach to documentation by focusing on countries with high risk transactions and countries with aggressive tax authorities