# Transfer Pricing Local File: [Local entity name] FY[YYYY]

> Entity-level transfer pricing documentation (the "local file") for one
> taxpayer in a multinational enterprise (MNE) group: the local entity and
> its management, each category of controlled transaction, the functional
> analysis, method selection, comparables search, arm's length range,
> adjustments, conclusion and the reconciliation to the local financial
> statements. Structure follows the OECD Transfer Pricing Guidelines for
> Multinational Enterprises and Tax Administrations 2022, Chapter V,
> Annex II, with a cross-reference to local rules in Vietnam, Germany, the
> United Kingdom and the United States (as of 2026-10). Replace every
> `[bracketed]` value and every row marked *Example*. This is a document
> format, not tax, legal, accounting or financial advice. Requirements are
> referenced by number: obtain the guidelines or the law for the normative
> text.

<!--
Guidance: How to use this template
- Prepare one local file per taxpayer (and, where local law asks, per
  permanent establishment) per financial year. It must be consistent with
  the group's Transfer Pricing Master File
  (`finance/transfer-pricing-master-file`) and with the Country-by-Country
  Report Workpaper (`finance/country-by-country-report-workpaper`).
- Fill section 1 first: the local deadline, language and exemption test
  decide whether a full file, a simplified file or no file is needed.
- Section 7 is the heart of the file: the comparables, the profit level
  indicator and the arm's length range. Recompute the range yourself; do
  not copy database output without checking it.
- Worked example: Ostrander Vietnam Co., Ltd (OST-VN), a fictional
  contract software developer for its Dutch parent Ostrander Group N.V.
  (OST-NL), with a small local resale activity. The group had consolidated
  revenue of EUR 820m in FY2025 and EUR 900m in FY2026. Financial year 2026,
  amounts in EUR thousand (functional reporting currency of the group) with
  VND equivalents where the local rule uses VND. Entity IDs and policy IDs
  (TPP-NNN) come from the master file.
- Related documents: Income Tax Provision (`finance/income-tax-provision`),
  Related Party Register (`finance/related-party-register`), Month-End
  Close Checklist (`finance/month-end-close-checklist`) for true-up
  postings, Account Reconciliation (`finance/account-reconciliation`) for
  intercompany balances.
-->

## Document control

<!-- Guidance: Record the taxpayer's tax identification and the period. Freeze the version given to the tax authority. If the file is translated, record which language version prevails. -->

| Field | Value |
|---|---|
| Document ID | [TP-LF-VN-FY2026] |
| Version | [1.0] |
| Status | [Draft / In review / Approved / Superseded] |
| Taxpayer | [Legal name, tax ID] *Example:* Ostrander Vietnam Co., Ltd (OST-VN), tax ID [0000000000] |
| Jurisdiction | [Country] *Example:* Vietnam |
| Financial year | [YYYY-MM-DD to YYYY-MM-DD] *Example:* 2026-01-01 to 2026-12-31 |
| Currency and units | [EUR thousand; VND million in local tables] |
| Related master file | [TP-MF-FY2026] |
| Owner | [@local-finance-director] |
| Prepared by | [@tp-manager], [External adviser, if any] |
| Approvers/reviewers | [@head-of-tax], [@legal-representative], [@cfo] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential: tax authority and authorised staff only] |
| Language | [English and Vietnamese; Vietnamese version provided on request] |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Local legal representative or general director | [@name] | [Approve / Return] | YYYY-MM-DD |
| Group Head of Tax | [@name] | [Approve / Return] | YYYY-MM-DD |
| External adviser review (optional) | [Firm, @name] | [Reviewed] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@author] | Draft with FY financial data and prior-year benchmark rolled forward |
| 0.9 | YYYY-MM-DD | [@author] | Benchmark refreshed, segmentation reviewed |
| 1.0 | YYYY-MM-DD | [@author] | Approved |

## Contents

- [1. Purpose, scope and legal basis](#1-purpose-scope-and-legal-basis)
- [2. Local entity](#2-local-entity)
- [3. Controlled transactions](#3-controlled-transactions)
- [4. Functional, asset and risk analysis](#4-functional-asset-and-risk-analysis)
- [5. Method selection](#5-method-selection)
- [6. Tested party and comparables search](#6-tested-party-and-comparables-search)
- [7. Financial indicators and arm's length range](#7-financial-indicators-and-arms-length-range)
- [8. Adjustments and segmentation](#8-adjustments-and-segmentation)
- [9. Conclusion](#9-conclusion)
- [10. APAs, rulings and disputes](#10-apas-rulings-and-disputes)
- [11. Cross-reference to OECD Annex II and local rules](#11-cross-reference-to-oecd-annex-ii-and-local-rules)
- [12. Review log and evidence index](#12-review-log-and-evidence-index)
- [13. Glossary and references](#13-glossary-and-references)
- [Standard and licence note](#standard-and-licence-note)

## 1. Purpose, scope and legal basis

<!-- Guidance: Answer: is this entity required to prepare a local file for this year, under which rule, by when, and in which language? Record the exemption test with numbers. Common pitfall: relying on last year's exemption after revenue has grown or the law has changed (Vietnam replaced its transfer pricing decree from 2026-07-01). -->

### 1.1 Purpose

This local file documents the controlled transactions of [Local entity]
with associated enterprises for [YYYY], explains how they were priced, and
demonstrates that the results are consistent with the arm's length
principle. It supports the corporate income tax return and the related
party disclosures for the year.

*Example:* Ostrander Vietnam Co., Ltd provides software development
services to its parent and resells a small volume of point-of-sale hardware
bought from the parent. Both flows are controlled transactions. The file
shows that the development segment earned a net cost plus of 8.0%, inside
the interquartile range of comparable independent service providers, and
that the resale segment earned an operating margin inside its own range.

### 1.2 Local requirements (as of 2026-10)

Check local law: thresholds, deadlines and forms change.

| Jurisdiction | Legal basis (as of 2026-10) | Local file duty and exemptions | Timing and language |
|---|---|---|---|
| Vietnam | Decree 255/2026/ND-CP, effective 2026-07-01, applies from the 2026 corporate income tax period | Taxpayers with related-party transactions prepare documentation unless exempt; exempt if revenue is below VND 500bn, there is no revenue or cost from exploiting intangibles, and the net margin is at least 5% (distribution), 10% (manufacturing) or 15% (processing); the former simple-function condition is removed | Prepare before the corporate income tax finalisation return; provide on request within the period the decree sets (confirm); Vietnamese language for submissions (confirm) |
| Germany | Section 90(3) and (4) AO; GAufzV section 4 | Every entity with cross-border related-party transactions keeps a transaction matrix and local documentation; small-entity relief in GAufzV section 6 | 30 days from a request; in a tax audit, the transaction matrix and records of extraordinary transactions are due within 30 days of the audit order |
| United Kingdom | SI 2023/818 | Local file in OECD format for UK entities of groups with consolidated revenue of EUR 750m or more, periods from 2023-04-01 | Produce within 30 days of an HMRC request |
| United States | IRC section 6662(e); Treas. Reg. 1.6662-6(d)(2)(iii) | Documentation optional but needed for penalty protection; ten principal documents | In existence when the return is filed; provide within 30 days of an IRS request |
| [Other] | [Law] | [Duty] | [Timing] |

### 1.3 Exemption and scope test

| Test | Value | Result |
|---|---|---|
| Total revenue FY2026 *(Example)* | EUR 131,640k; VND 3,751,740m at an average rate of VND 28,500 per EUR | Above the VND 500bn exemption threshold |
| Revenue or costs from exploiting intangibles *(Example)* | None: all development results vest in OST-NL | Not relevant once the revenue test fails |
| Conclusion *(Example)* | | Full local file required for FY2026 |

Check: 131,640 x 28,500 = 3,751,740,000 thousand VND = VND 3,751,740m (about VND 3,751.7bn).

Use the exchange rate the local rule specifies for the test (for example the
rate used in the statutory accounts). If revenue sits close to a threshold,
document the rate source, because a different rate can change the result.

## 2. Local entity

<!-- Guidance: Describe the taxpayer so a tax inspector understands it without the master file open. Answer: who manages the entity and to whom do they report (including people abroad), what is its strategy, which restructurings affected it, and who are its competitors. Common pitfall: an organisation chart that hides that key decisions are taken by managers employed elsewhere in the group. -->

### 2.1 Management structure and reporting lines

| Role | Name or position | Employer | Reports to (country) |
|---|---|---|---|
| General director *(Example)* | [Name] | OST-VN | Group CTO (Netherlands) |
| Engineering managers (6) *(Example)* | [Names] | OST-VN | General director (Vietnam); product owners in the Netherlands for priorities |
| Finance manager *(Example)* | [Name] | OST-VN | Group controller (Netherlands) |
| Resale sales lead *(Example)* | [Name] | OST-VN | General director (Vietnam) |

```mermaid
flowchart TD
  CTO["Group CTO, OST-NL Netherlands"] --> GD["General director, OST-VN"]
  PO["Product owners, OST-NL Netherlands"] -.->|"set sprint priorities"| EM["Engineering managers, OST-VN"]
  GD --> EM
  GD --> FIN["Finance manager, OST-VN"]
  GD --> SALES["Resale sales lead, OST-VN"]
  CTRL["Group controller, OST-NL"] -.->|"functional line"| FIN
```

### 2.2 Business and strategy

*Example:* OST-VN was set up in 2021 in Ho Chi Minh City as the group's
main engineering centre. At the end of FY2026 it employed 2,900 people, of
whom 2,850 were engineers, testers and designers. Its strategy for 2027 is
to add about 300 engineers while keeping cost per full-time equivalent
below the group target set in the annual budget. A team of 40 resells
point-of-sale hardware to Vietnamese merchants who use the Ostrander
platform.

### 2.3 Restructurings and transfers of intangibles

*Example:* On 2026-04-01 40 engineering roles moved from OST-NL to
OST-VN (master file CHG-001 and RST-001). The roles perform development
under the existing services agreement. No intangible, customer list or
decision-making function moved, so no compensation for a transfer arose.

### 2.4 Key competitors

List the main competitors in each activity. *Example:* For development
services, independent software outsourcing firms in Vietnam and the region
compete for the same engineers and clients. For resale, local resellers of
point-of-sale hardware compete on price and delivery time.

## 3. Controlled transactions

<!-- Guidance: List each category of controlled transaction with amounts and counterparties. Answer: what was bought, sold, provided or financed, with whom, for how much, and under which written agreement. Common pitfall: omitting balances such as unpaid service fees, which some authorities treat as financing. -->

### 3.1 Transactions by category

| Transaction ID | Category | Counterparty (country) | Direction | FY2026 amount (EUR thousand) | VND million | Policy | Agreement |
|---|---|---|---|---|---|---|---|
| CT-001 *(Example)* | Software development services | OST-NL (Netherlands) | Income | 116,640 | 3,324,240 | TPP-002 | AGR-001 |
| CT-002 *(Example)* | Purchase of point-of-sale hardware for resale | OST-NL (Netherlands) | Expense | 12,000 | 342,000 | TPP-001 (resale variant) | AGR-003 |
| CT-003 *(Example)* | Group support services (finance, HR, IT) | OST-NL (Netherlands) | Expense | 1,500 | 42,750 | TPP-003 | AGR-004 |
| [CT-NNN] | [Category] | [Entity] | [Income / Expense] | [Amount] | [Amount] | [Policy] | [Agreement] |

Check: 116,640 x 28.5 = 3,324,240; 12,000 x 28.5 = 342,000; 1,500 x 28.5 = 42,750 (VND million at VND 28,500 per EUR).

### 3.2 Intercompany agreements

| Agreement ID | Title | Parties | Effective date | Key terms relevant to pricing |
|---|---|---|---|---|
| AGR-001 *(Example)* | Contract research and development services agreement | OST-VN, OST-NL | 2022-01-01 | Results vest in OST-NL; fee equals total operating costs plus 8%; OST-NL approves statements of work; quarterly invoices, 60-day payment |
| AGR-003 *(Example)* | Supply agreement for resale | OST-NL, OST-VN | 2023-03-01 | Transfer price set to give OST-VN a target operating margin; OST-NL takes back obsolete stock |
| AGR-004 *(Example)* | Group services agreement | OST-NL and subsidiaries | 2021-07-01 | Allocated cost plus 5%, allocated by a weighted key of external revenue and system users (50% each); OST-VN share EUR 1,500k |

Attach copies. Where conduct differs from the written terms, describe the
actual conduct, because the accurate delineation of a transaction follows
what the parties actually do.

### 3.3 Intercompany balances at year end

| Counterparty | Receivable (EUR thousand) | Payable (EUR thousand) | Days outstanding | Comment |
|---|---|---|---|---|
| OST-NL *(Example)* | 19,500 | 1,800 | 61 (receivable) | Within the 60-day term plus normal processing; no interest charged |

## 4. Functional, asset and risk analysis

<!-- Guidance: Delineate each transaction accurately: functions performed, assets used and risks assumed by each party. Answer: who controls each economically significant risk and has the financial capacity to bear it? Common pitfall: listing risks in contracts without testing who actually controls them, which the OECD risk framework in Chapter I requires. -->

### 4.1 Functions

| Function | OST-VN | OST-NL | Evidence |
|---|---|---|---|
| Decide which products and features to build *(Example)* | Minor | Major | Product committee minutes in the Netherlands |
| Write, test and document code *(Example)* | Major | Moderate | Sprint records, time sheets |
| Recruit and manage engineers *(Example)* | Major | Minor | Hiring records, local HR |
| Quality assurance and release approval *(Example)* | Moderate | Major | Release sign-off log |
| Sell hardware to Vietnamese merchants *(Example)* | Major | None | Sales invoices |
| Set resale prices and stock levels *(Example)* | Moderate | Major | Group price list, stock approvals |

### 4.2 Assets

*Example:* OST-VN uses office leases, laptops, test devices and servers
(tangible assets of EUR 18,000k net book value at year end) and an
experienced workforce. It does not own intangibles: code, designs and
documentation it produces belong to OST-NL under AGR-001. For resale it
holds a small hardware stock (average EUR 1,500k).

### 4.3 Risks

Apply the six-step process for analysing risk in Chapter I of the OECD
Guidelines: identify the economically significant risks, map contractual
allocation, determine which party performs control functions and has the
financial capacity, check whether conduct matches contract, and allocate
risk to the party that controls it.

| Risk ID | Risk | Contractual allocation | Control functions performed by | Financial capacity | Conclusion |
|---|---|---|---|---|---|
| RSK-001 *(Example)* | Development risk (a project fails or is abandoned) | OST-NL | OST-NL product committee | OST-NL | Borne by OST-NL; OST-VN is paid for effort regardless of outcome |
| RSK-002 *(Example)* | Service capacity risk (idle engineers) | OST-NL through cost-plus on all costs | OST-NL decides demand; OST-VN manages hiring | OST-NL | Mainly OST-NL; OST-VN bears operational execution risk |
| RSK-003 *(Example)* | Foreign exchange risk on EUR invoices | OST-VN | OST-VN finance with group treasury policy | OST-VN | Borne by OST-VN; FX result excluded from operating profit |
| RSK-004 *(Example)* | Inventory risk on resale stock | OST-NL takes back obsolete stock | OST-NL approves stock levels | OST-NL | Limited for OST-VN |
| RSK-005 *(Example)* | Credit risk on Vietnamese merchants | OST-VN | OST-VN | OST-VN | Borne by OST-VN (low: prepayment terms) |

### 4.4 Characterisation

*Example:* For CT-001, OST-VN is a contract software service provider:
it performs routine development under the direction of OST-NL, owns no
intangibles and bears limited risk. For CT-002, it is a limited-risk
reseller. OST-NL is the entrepreneur that controls development and
market risks and owns the platform.

## 5. Method selection

<!-- Guidance: Explain the most appropriate method for each transaction category and why the others were rejected. Answer: which method best fits the delineated transaction and the available data? Common pitfall: choosing a method because data are available rather than because it fits the facts. -->

The OECD Guidelines (Chapter II) describe five methods: comparable
uncontrolled price (CUP), resale price, cost plus, transactional net
margin method (TNMM) and transactional profit split. Select the most
appropriate method for each category and record the reasons for rejecting
the others.

| Method | CT-001 development services | Reason |
|---|---|---|
| CUP *(Example)* | Rejected | No reliable price for identical development services between independent parties; internal comparables do not exist because OST-VN serves only the group |
| Resale price *(Example)* | Rejected | Not a resale transaction |
| Cost plus (gross) *(Example)* | Rejected | Gross margin data of comparables are not reported consistently; cost classifications differ |
| TNMM *(Example)* | Selected | OST-VN is the less complex party; reliable net margin data are available for independent service providers |
| Profit split *(Example)* | Rejected | OST-VN makes no unique and valuable contribution; integration is not so high that one-sided testing fails |

For CT-002 (resale), TNMM with operating margin on sales was selected for
the same reasons; for CT-003 (group services), the cost-plus charge under
the low value-adding services approach is tested in the provider's file
and checked here for the benefit test (the services are actually received
and would be paid for by an independent company).

## 6. Tested party and comparables search

<!-- Guidance: Document the search so that a tax inspector can repeat it. Answer: which party is tested, which database and dates, which screening steps, how many companies survived each step, and why each rejected company failed. Common pitfall: undocumented manual rejections, which inspectors treat as cherry-picking. -->

### 6.1 Tested party

*Example:* OST-VN is the tested party for CT-001 and CT-002: its
functions are simpler and better documented than those of OST-NL, and
independent companies with similar functions can be found.

### 6.2 Search strategy

Follow the local order of priority for data sources and comparables.
Under Decree 255/2026/ND-CP, public and official sources come before
commercial databases and tax authority data, and internal comparables come
before domestic ones, which come before regional ones. Confirm the exact
order in the decree text.

| Step | Criterion | Companies remaining *(Example)* |
|---|---|---|
| S-01 | Database [name], extraction date YYYY-MM-DD; industry codes for computer programming and software services; Vietnam first, then Asia-Pacific | 2,140 |
| S-02 | Active companies with financial data for FY2023 to FY2025 | 1,180 |
| S-03 | Independence: no shareholder owning 25% or more that is itself an operating group | 640 |
| S-04 | Revenue between EUR 2m and EUR 200m | 310 |
| S-05 | Exclude persistent losses (losses in two or more of three years) | 238 |
| S-06 | Qualitative review of websites and annual reports: service provider for third parties, no significant own software products | 11 (2 Vietnam, 9 regional) |

```mermaid
flowchart LR
  A["S-01 Initial set 2,140"] --> B["S-02 Data available 1,180"]
  B --> C["S-03 Independent 640"]
  C --> D["S-04 Size 310"]
  D --> E["S-05 Not loss-making 238"]
  E --> F["S-06 Accepted 11"]
```

### 6.3 Domestic first, then regional

*Example:* The domestic search accepted 2 Vietnamese companies, too few to
form a reliable range. The search was extended to the Asia-Pacific region
(Malaysia, Thailand, the Philippines, Indonesia, India), which accepted 9
more. Country risk differences were considered and found not to require an
adjustment, because the accepted companies serve export clients on similar
terms.

### 6.4 Accept and reject matrix

Keep a full list of companies reviewed at step S-06 with the reason for
each rejection (for example "own software products above 20% of revenue",
"mainly hardware trading", "insufficient segment information"). Store it in
the evidence index (section 12), not in the body of this file.

## 7. Financial indicators and arm's length range

<!-- Guidance: Show the profit level indicator, the comparables' results, the range and where the tested party falls. Answer: how is the indicator defined, over which years, which range statistic is used, and is the tested result inside it? Common pitfall: using a different cost base for the tested party than for the comparables (for example excluding pass-through costs on one side only). -->

### 7.1 Profit level indicator

For CT-001 the indicator is the net cost plus (NCP): operating profit as a
share of total operating costs.

$$
NCP = \frac{\text{Operating revenue} - \text{Total operating costs}}{\text{Total operating costs}}
$$

Total operating costs include cost of services, personnel, depreciation,
office and IT costs and group service charges, and exclude interest,
foreign exchange results, income tax and extraordinary items. Apply the
same definition to the comparables.

### 7.2 Comparables results

Weighted average NCP over FY2023 to FY2025 (the latest three years
available at the extraction date):

| Comparable ID | Country | Weighted average NCP (%) |
|---|---|---|
| CMP-001 *(Example)* | Vietnam | 4.1 |
| CMP-002 *(Example)* | Malaysia | 5.3 |
| CMP-003 *(Example)* | Philippines | 6.0 |
| CMP-004 *(Example)* | Thailand | 6.8 |
| CMP-005 *(Example)* | Vietnam | 7.4 |
| CMP-006 *(Example)* | India | 8.2 |
| CMP-007 *(Example)* | Indonesia | 9.0 |
| CMP-008 *(Example)* | Malaysia | 9.9 |
| CMP-009 *(Example)* | Thailand | 10.6 |
| CMP-010 *(Example)* | India | 12.3 |
| CMP-011 *(Example)* | Philippines | 14.8 |

Arithmetic mean: 94.4 / 11 = 8.58%.

### 7.3 Interquartile range

Two common conventions give slightly different quartiles. State which one
the local rule requires; if it is silent, state the convention used and
apply it consistently every year.

Linear interpolation (spreadsheet inclusive quartile convention). For $n$
sorted results $x_{(1)} \le \dots \le x_{(n)}$ and percentile $p$, compute
the position $h = 1 + p(n - 1)$, take $k$ as the integer part of $h$, and

$$
Q_p = x_{(k)} + (h - k)\,\big(x_{(k+1)} - x_{(k)}\big)
$$

With $n = 11$:

| Statistic | Position $h$ | Calculation | Result (%) |
|---|---|---|---|
| Lower quartile (25th) | 3.5 | 6.0 + 0.5 x (6.8 - 6.0) | 6.40 |
| Median (50th) | 6.0 | 8.2 | 8.20 |
| Upper quartile (75th) | 8.5 | 9.9 + 0.5 x (10.6 - 9.9) | 10.25 |

US regulation convention (Treas. Reg. 1.482-1(e)(2)(iii)(C)): the 25th
percentile is the lowest result such that at least 25% of results are at
or below it (averaged with the next result if exactly 25%), and likewise
for the 75th and 50th. With 11 results, 25% of 11 is 2.75, so the 3rd
result (6.0%); 75% of 11 is 8.25, so the 9th result (10.6%); 50% of 11 is
5.5, so the 6th result (8.2%).

| Convention | Lower quartile | Median | Upper quartile |
|---|---|---|---|
| Linear interpolation *(Example)* | 6.40% | 8.20% | 10.25% |
| US regulation *(Example)* | 6.00% | 8.20% | 10.60% |
| 35th to 75th percentile, linear interpolation (former Vietnamese practice) *(Example)* | 7.10% (35th) | 8.20% | 10.25% |

Vietnam applies its own percentile band and adjustment point. Decree
132/2020/ND-CP used the 35th to 75th percentile, with adjustment to the
median; confirm whether Decree 255/2026/ND-CP keeps this, and recompute
the range on that basis before finalising the file. *Example:* the 35th
percentile by linear interpolation is at position 1 + 0.35 x 10 = 4.5,
so 6.8 + 0.5 x (7.4 - 6.8) = 7.10%.

### 7.4 Tested party result

| Item | CT-001 development segment FY2026 (EUR thousand) |
|---|---|
| Operating revenue (service fee) *(Example)* | 116,640 |
| Personnel costs *(Example)* | 86,400 |
| Office and IT costs *(Example)* | 12,800 |
| Depreciation *(Example)* | 7,300 |
| Group service charge (CT-003) *(Example)* | 1,500 |
| Total operating costs *(Example)* | 108,000 |
| Operating profit *(Example)* | 8,640 |
| NCP *(Example)* | 8.00% |

Check: 86,400 + 12,800 + 7,300 + 1,500 = 108,000; 116,640 - 108,000 = 8,640; 8,640 / 108,000 = 8.00%.

The NCP of 8.00% lies inside both versions of the interquartile range
(6.40% to 10.25%, and 6.00% to 10.60%) and inside the 35th to 75th
percentile band (7.10% to 10.25%), slightly below the median of 8.20%.

### 7.5 Sensitivity

*Example:* Had the fee been set at cost plus 5% (fee EUR 113,400k, NCP
5.00%), the result would sit below the lower quartile under both
conventions. If the tax authority adjusted to the median of 8.20%, the
adjustment would be 108,000 x (8.20% - 5.00%) = EUR 3,456k of additional
taxable income in Vietnam (about EUR 346k of tax at OST-VN's 10%
preferential rate, before interest and penalties; check whether the
incentive covers an adjustment), with a risk of double taxation unless the Netherlands
grants a corresponding adjustment. This shows why the year-end true-up
in TPP-002 matters.

## 8. Adjustments and segmentation

<!-- Guidance: Explain how the entity's accounts were split between transaction categories and which comparability adjustments were made. Answer: is each segment tested separately, how were shared costs allocated, and were working capital or other adjustments applied to comparables? Common pitfall: testing the entity-wide margin when it mixes routine services with resale, which hides a loss or excess in one activity. -->

### 8.1 Segmented income statement

| Line (EUR thousand) | Development segment (CT-001) | Resale segment (CT-002) | Entity total |
|---|---|---|---|
| Revenue *(Example)* | 116,640 | 15,000 | 131,640 |
| Cost of goods sold (purchases from OST-NL, CT-002) *(Example)* | 0 | (12,000) | (12,000) |
| Operating costs *(Example)* | (108,000) | (2,250) | (110,250) |
| Operating profit *(Example)* | 8,640 | 750 | 9,390 |
| Indicator *(Example)* | NCP 8.00% | Operating margin 5.00% | |

Check: 15,000 - 12,000 - 2,250 = 750; 750 / 15,000 = 5.00%; 8,640 + 750 = 9,390; 131,640 - 12,000 - 110,250 = 9,390.

Allocation keys: personnel by time records; office costs by floor space;
group service charge to the development segment because the services
support the engineering workforce. *Example:* The resale segment was
tested against a separate set of independent distributors of electronic
equipment (interquartile range 2.6% to 5.4%, median 3.9% *Example*); its
operating margin of 5.00% is inside the range.

### 8.2 Comparability adjustments

| Adjustment | Applied? | Reason |
|---|---|---|
| Working capital adjustment *(Example)* | No | Receivable days of OST-VN (61) are close to the comparables' median (58); the effect is immaterial |
| Capacity utilisation *(Example)* | No | No idle capacity in FY2026 |
| Accounting consistency *(Example)* | Yes | Reclassified foreign exchange results out of operating profit for three comparables |

### 8.3 Year-end adjustments

*Example:* Monthly invoices in FY2026 were based on budgeted costs of
EUR 105,000k plus 8% (EUR 113,400k). Actual costs were EUR 108,000k, so a
true-up invoice of EUR 3,240k was raised in December 2026: 108,000 x 1.08 =
116,640; 116,640 - 113,400 = 3,240. Record the invoice date and confirm that it
was booked in the same financial year and in both entities.

## 9. Conclusion

<!-- Guidance: State a clear conclusion per transaction category with the evidence. Common pitfall: a vague conclusion such as "broadly consistent" that gives a tax inspector no position to accept. -->

| Transaction ID | Method | Tested result | Range | Conclusion |
|---|---|---|---|---|
| CT-001 *(Example)* | TNMM, NCP | 8.00% | 6.40% to 10.25% | Within the arm's length range |
| CT-002 *(Example)* | TNMM, operating margin | 5.00% | 2.6% to 5.4% | Within the arm's length range |
| CT-003 *(Example)* | Cost plus 5% (provider file) | Benefit test met | Not applicable | Charge accepted as arm's length |

*Example:* Based on the analysis above, the controlled transactions of
Ostrander Vietnam Co., Ltd in FY2026 are consistent with the arm's length
principle, and no adjustment to taxable income is required.

## 10. APAs, rulings and disputes

<!-- Guidance: List any advance pricing agreement, ruling, audit or mutual agreement procedure that affects this entity. If none, say so explicitly. -->

| Item | Status *(Example)* |
|---|---|
| Unilateral or bilateral APA covering OST-VN | None |
| Rulings from other jurisdictions affecting these transactions | None |
| Open audits or adjustments | None; last transfer pricing audit closed for FY2023 without adjustment |
| Mutual agreement procedure cases | None |

## 11. Cross-reference to OECD Annex II and local rules

<!-- Guidance: A traceability matrix makes the file reusable in several jurisdictions. Answer: where is each OECD Annex II item, each US principal document and each local add-on answered? Common pitfall: missing US items such as the index of documents, which are part of the principal documents list. -->

### 11.1 OECD Annex II items

| Item | OECD Annex II heading | Section |
|---|---|---|
| LF-01 | Local entity: management structure, organisation chart, reporting lines | 2.1 |
| LF-02 | Local entity: business and strategy, restructurings, intangible transfers | 2.2, 2.3 |
| LF-03 | Local entity: key competitors | 2.4 |
| LF-04 | Controlled transactions: description, amounts, counterparties | 3.1 |
| LF-05 | Copies of intercompany agreements | 3.2 |
| LF-06 | Comparability and functional analysis | 4 |
| LF-07 | Method selection and reasons | 5 |
| LF-08 | Tested party | 6.1 |
| LF-09 | Summary of assumptions | 4.4, 7.1 |
| LF-10 | Reasons for multi-year analysis | 7.2 |
| LF-11 | Comparables list and search | 6.2 to 6.4, 7.2 |
| LF-12 | Comparability adjustments | 8.2 |
| LF-13 | Reasons for arm's length conclusion | 9 |
| LF-14 | Financial information used to apply the method | 7.4, 8.1 |
| LF-15 | APAs and rulings | 10 |
| LF-16 | Annual local accounts and reconciliation to financial statements | 8.1, 12 |

### 11.2 US principal documents (Treas. Reg. 1.6662-6(d)(2)(iii)(B))

Use this table when the entity, or a US counterparty, relies on the file
for penalty protection.

| No. | Principal document (short title) | Section |
|---|---|---|
| 1 | Overview of the business | 2.2; master file 3 |
| 2 | Organisational structure | 2.1; master file 2 |
| 3 | Documentation required by the section 482 regulations | 3 to 8 |
| 4 | Method selected and why | 5 |
| 5 | Alternative methods considered and why rejected | 5 |
| 6 | Controlled transactions and internal data | 3, 7.4 |
| 7 | Comparables and adjustments | 6, 7.2, 8.2 |
| 8 | Economic analysis and projections relied on | 7, 8 |
| 9 | Relevant data obtained after year end and before filing | 12 |
| 10 | Index of documents and record-keeping system | 12 |

### 11.3 Local add-ons

| Jurisdiction | Add-on (as of 2026-10) | Where answered |
|---|---|---|
| Vietnam | Related-party transaction disclosure form filed with the corporate income tax finalisation return (confirm the form under Decree 255/2026/ND-CP); data source priority; percentile band | 3.1, 6.2, 7.3 |
| Germany | Transaction matrix (section 90(3) AO); records of extraordinary transactions prepared promptly | Separate matrix appendix for German entities |
| United Kingdom | OECD format local file for in-scope groups | This file |
| [Other] | [Item] | [Section] |

## 12. Review log and evidence index

<!-- Guidance: Keep the evidence trail that supports each statement. Answer: where is each source document, who reviewed the file, and what changed after year end? Common pitfall: a file that cannot be supported by documents when an inspector asks within the 30-day window. -->

| Evidence ID | Document | Location | Owner |
|---|---|---|---|
| EVD-001 *(Example)* | Signed agreements AGR-001, AGR-003, AGR-004 | [Contract repository path] | [@legal] |
| EVD-002 *(Example)* | Database extraction file and accept or reject matrix | [Path] | [@tp-manager] |
| EVD-003 *(Example)* | Segmented trial balance FY2026 reconciled to statutory accounts | [Path] | [@finance-manager] |
| EVD-004 *(Example)* | True-up invoice and posting | [Path] | [@finance-manager] |
| EVD-005 *(Example)* | Interview notes with the CTO and general director | [Path] | [@tp-manager] |

| Review date | Reviewer | Scope | Outcome |
|---|---|---|---|
| YYYY-MM-DD | [@head-of-tax] | Full file | [Approved with comments] |

Post-year-end data: record events after year end and before filing that
affect the analysis (for example a comparable acquired by a group, which
removes its independence). *Example:* None identified.

## 13. Glossary and references

<!-- Guidance: Define each acronym once and list the sources with the edition you checked. -->

### 13.1 Glossary

| Term | Meaning |
|---|---|
| Arm's length range | The range of results from comparable independent transactions considered acceptable |
| Comparable | An independent company or transaction whose conditions are sufficiently similar to the tested transaction |
| Interquartile range | The range from the 25th to the 75th percentile of the comparables' results |
| NCP | Net cost plus: operating profit divided by total operating costs |
| Operating margin | Operating profit divided by net sales |
| Segmentation | Splitting an entity's results by transaction category so each is tested separately |
| TNMM | Transactional net margin method |
| True-up | Year-end adjustment that brings the actual result to the policy target |

### 13.2 References

| Reference | Version or date checked | Use |
|---|---|---|
| OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations | 2022 edition, checked 2026-10-25 | Chapter I risk framework, Chapter II methods, Chapter III comparability, Chapter V Annex II structure |
| Vietnam Decree 255/2026/ND-CP | Effective 2026-07-01 | Exemption test, data source and comparable priority |
| Germany section 90 AO and GAufzV | Checked 2026-10-25 | Transaction matrix, deadlines |
| UK SI 2023/818 | As made | Scope for UK entities |
| US Treas. Reg. 1.6662-6 and 1.482-1(e) | eCFR text checked 2026-10-25 | Principal documents; interquartile range convention |

## Standard and licence note

Structure aligned with the OECD Transfer Pricing Guidelines for
Multinational Enterprises and Tax Administrations 2022, Chapter V, Annex II
(OECD, used for structure and references only under the OECD terms and
conditions; OECD material published from 2024-07-01 is available under
CC BY 4.0). This is an adaptation in original wording; it does not
represent the official views of the OECD or its Member countries. The
jurisdiction rows and the US interquartile convention are based on public
law: Vietnam Decree 255/2026/ND-CP, German section 90 AO with the GAufzV,
UK SI 2023/818 (Open Government Licence v3.0) and US Treas. Reg. 1.6662-6
and 1.482-1 (US public domain), paraphrased in original words. Ostrander
Group N.V., its subsidiaries, the comparables and every figure are
fictional. This template is original text written for this collection.
Check the current official versions of the guidelines and each local law
before use. Template licence: MIT.