Three-tier OECD approach · BEPS Action 13
Transfer pricing documentation: Master File, Local File and CbC
The OECD divides TP documentation into three tiers. Knowing the difference helps a group avoid duplicate costs and gaps in front of the Tax Administration.
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In short
The OECD divides transfer pricing documentation into three tiers: Master File, Local File and the Country-by-Country report.
In Montenegro, the content of full and simplified documentation is set by Article 10 of the Instruction on determining transfer prices of transactions (Official Gazette of Montenegro 121/2022).
CbC reporting applies to groups with at least €750 million of consolidated revenue; the Montenegrin group member files a notification.
01Guide
Three tiers of TP documentation
Since 2015 (BEPS Action 13), the OECD has recommended a three-tier approach: Master File, Local File and the Country-by-Country report. In Montenegro, the content of full and simplified documentation is set by Article 10 of the Instruction on determining transfer prices of transactions (Official Gazette of Montenegro 121/2022), and CbC reporting applies from fiscal years starting on 1 January 2024.
Master File: the global “big picture” of the group: organisation, intangibles, financial activities, TP policy.
Local File: the local company in Montenegro: specific transactions, functional analysis, benchmark.
CbC report: aggregated data by jurisdiction for groups with at least €750 million of consolidated revenue in the previous year.
02Guide
What goes into the Master File
Under the OECD approach, the Master File is prepared by the group, most often by the ultimate parent company. For the local company it is the source for the group description that Article 10 of the Instruction also requires.
Organisational structure and ownership structure of the group.
Description of the group's business and key intangibles (brand, IP, know-how).
Description of intercompany financial activities (loans, guarantees, treasury).
Consolidated financial statements and existing agreements with tax administrations on transfer pricing.
03Guide
Common weaknesses of documentation
Weaknesses that stop documentation from defending prices:
A study “from a template”, without a real functional analysis.
A benchmark with undocumented rejection of companies (the rejected companies log is missing).
The Master File is “copied” into the Local File without adapting it to the Montenegrin company.
Agreements with related parties are missing or backdated.
One type of transaction is not covered (e.g. a forgotten royalty or management fee).
IIWhat you get
What goes into the Local File (Montenegro)
The content of full documentation in Montenegro is set by Article 10 of the Instruction (Official Gazette of Montenegro 121/2022): group and business analysis, functional analysis, choice of method, conclusion and annexes.
- 01
Analysis of the group and of the local company's business
- 02
Transactions with related parties, with amounts and the related party
- 03
Functional analysis
- 04
Choice of method, with a benchmark where the method requires one
- 05
Conclusion and annexes
IVMethodology
Under the OECD approach, the Master File is prepared by the group, most often by the ultimate parent company. For the local company it is the source for the group description that Article 10 of the Instruction also requires.
What goes into the Master File
VIFee
Group Master File
from €3,000
Group Master File · Timing is confirmed in writing before work starts, with the scope.
Scope, timing and fee are confirmed in writing before work starts. What is not included is listed in the written offer.
VIISources and legal framework
Primary sources for this page
Content prepared and checked by the Schule d.o.o. Podgorica team. The sources are in Montenegrin; this page is general information, not advice for a specific case.
Updated Sources checked
VIIIQuestions
Questions clients ask about this topic
Do we need a Master File if we are only a subsidiary in Montenegro?
The local documentation must contain a group and business analysis (Art. 10 of the Instruction). If the group has a Master File, it is the best source for that part; if not, we prepare the group analysis from the available data.
What if the parent company is not willing to share internal data for the Master File?
The local documentation must contain the group analysis required by Article 10 of the Instruction, but not necessarily the whole Master File. We help separate what is needed locally.
Is the CbC report public?
The CbC report under BEPS Action 13 is not public; tax administrations exchange it on the basis of agreements such as the CbC MCAA. Montenegro signed the MCAA on 14 May 2024, and the OECD's 2025 review describes it as a jurisdiction that does not yet receive CbC reports from other countries.
Inquiry
Tell us about your related parties and transactions
IXNext step
Describe your related parties and transactions: we reply on the next working day
We reply on the next working day. We name the fee in writing, in our reply to your inquiry. Scope and timing are confirmed in writing before work starts.