diff --git a/src/renderer/shared/api/xcm/lib/__tests__/multi-location-service.test.ts b/src/renderer/shared/api/xcm/lib/__tests__/multi-location-service.test.ts
new file mode 100644
index 0000000000..65b3324eb7
--- /dev/null
+++ b/src/renderer/shared/api/xcm/lib/__tests__/multi-location-service.test.ts
@@ -0,0 +1,200 @@
+import {
+  createAbsoluteMultiLocation,
+  createHere,
+  createParachainJunction,
+  createRelativeMultiLocation,
+} from '../location-types';
+import { multiLocationService } from '../multi-location-service';
+
+describe('shared/api/xcm/lib/multi-location-service', () => {
+  describe('reanchorAbsoluteLocation', () => {
+    test('reanchor global pov should remain unchanged', () => {
+      const initial = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const pov = createAbsoluteMultiLocation(...createHere());
+      const expected = createRelativeMultiLocation(0, createParachainJunction(1000));
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+
+    test('reanchor no common junctions', () => {
+      const initial = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(2000));
+      const expected = createRelativeMultiLocation(1, createParachainJunction(1000));
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+
+    test('reanchor one common junction', () => {
+      const initial = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(3000));
+      const expected = createRelativeMultiLocation(1, createParachainJunction(2000));
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+
+    test('reanchor all common junction', () => {
+      const initial = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const expected = createRelativeMultiLocation(0);
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+
+    test('reanchor global to global', () => {
+      const initial = createAbsoluteMultiLocation(...createHere());
+      const pov = createAbsoluteMultiLocation(...createHere());
+      const expected = createRelativeMultiLocation(0);
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+
+    test('reanchor pov is successor of initial', () => {
+      const initial = createAbsoluteMultiLocation(...createHere());
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const expected = createRelativeMultiLocation(1);
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+
+    test('reanchor initial is successor of pov', () => {
+      const initial = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const expected = createRelativeMultiLocation(0, createParachainJunction(2000));
+
+      const result = multiLocationService.reanchorAbsoluteLocation(initial, pov);
+
+      expect(result).toEqual(expected);
+    });
+  });
+
+  describe('restoreAbsoluteLocation', () => {
+    test('restore global pov should remain unchanged', () => {
+      const expected = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const pov = createAbsoluteMultiLocation(...createHere());
+
+      const relative = createRelativeMultiLocation(0, createParachainJunction(1000));
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('restore no common junctions', () => {
+      const expected = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(2000));
+
+      const relative = createRelativeMultiLocation(1, createParachainJunction(1000));
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('restore one common junction', () => {
+      const expected = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(3000));
+
+      const relative = createRelativeMultiLocation(1, createParachainJunction(2000));
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('restore all common junction', () => {
+      const expected = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+
+      const relative = createRelativeMultiLocation(0);
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('restore global to global', () => {
+      const expected = createAbsoluteMultiLocation(...createHere());
+      const pov = createAbsoluteMultiLocation(...createHere());
+
+      const relative = createRelativeMultiLocation(0);
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('restore pov is successor of initial', () => {
+      const expected = createAbsoluteMultiLocation(...createHere());
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000));
+
+      // Target is ancestor of POV: go up 1, then Here
+      const relative = createRelativeMultiLocation(1);
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('restore initial is successor of pov', () => {
+      const expected = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000));
+
+      const relative = createRelativeMultiLocation(0, createParachainJunction(2000));
+
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+      expect(restored).toEqual(expected);
+    });
+
+    test('should throw error for negative parents', () => {
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const relative = createRelativeMultiLocation(-1, createParachainJunction(2000));
+
+      expect(() => {
+        multiLocationService.restoreAbsoluteLocation(relative, pov);
+      }).toThrow('Parents cannot be negative');
+    });
+
+    test('should throw error when parents exceed pov junctions', () => {
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000));
+      const relative = createRelativeMultiLocation(2, createParachainJunction(2000));
+
+      expect(() => {
+        multiLocationService.restoreAbsoluteLocation(relative, pov);
+      }).toThrow(
+        'Invalid relative location from given pov: Relative location has 2 parents whereas pov has only 1 junctions',
+      );
+    });
+
+    test('bidirectional test: reanchor then restore should return original', () => {
+      const original = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(3000));
+
+      // Reanchor to relative
+      const relative = multiLocationService.reanchorAbsoluteLocation(original, pov);
+
+      // Restore back to absolute
+      const restored = multiLocationService.restoreAbsoluteLocation(relative, pov);
+
+      expect(restored).toEqual(original);
+    });
+
+    test('bidirectional test: restore then reanchor should return original relative', () => {
+      const relative = createRelativeMultiLocation(1, createParachainJunction(2000));
+      const pov = createAbsoluteMultiLocation(createParachainJunction(1000), createParachainJunction(3000));
+
+      // Restore to absolute
+      const absolute = multiLocationService.restoreAbsoluteLocation(relative, pov);
+
+      // Reanchor back to relative
+      const reanchored = multiLocationService.reanchorAbsoluteLocation(absolute, pov);
+
+      expect(reanchored).toEqual(relative);
+    });
+  });
+});
diff --git a/src/renderer/shared/api/xcm/lib/location-types.ts b/src/renderer/shared/api/xcm/lib/location-types.ts
new file mode 100644
index 0000000000..670b0736f9
--- /dev/null
+++ b/src/renderer/shared/api/xcm/lib/location-types.ts
@@ -0,0 +1,46 @@
+import { type HexString } from '@/shared/core';
+
+export type Junction =
+  | { Parachain: number }
+  | { AccountId32: { network?: string; id: HexString } }
+  | { AccountKey20: { network?: string; key: HexString } }
+  | { PalletInstance: number }
+  | { GeneralIndex: string }
+  | { GeneralKey: { length: number; data: HexString } };
+
+export type RelativeMultiLocation = {
+  parents: number;
+  interior: Junction[];
+};
+
+export type AbsoluteMultiLocation = {
+  interior: Junction[];
+};
+
+export type XcmVersion = 2 | 3 | 4 | 5;
+
+export type VersionedXcm<T> = {
+  xcm: T;
+  version: XcmVersion;
+};
+
+// Helper functions for creating multi-locations
+export function createParachainJunction(id: number): Junction {
+  return { Parachain: id };
+}
+
+export function createAbsoluteMultiLocation(...junctions: Junction[]): AbsoluteMultiLocation {
+  return { interior: junctions };
+}
+
+export function createRelativeMultiLocation(parents: number, ...junctions: Junction[]): RelativeMultiLocation {
+  return { parents, interior: junctions };
+}
+
+export function createHere(): Junction[] {
+  return [];
+}
+
+export function createVersionedXcm<T>(xcm: T, version: XcmVersion): VersionedXcm<T> {
+  return { xcm, version };
+}
diff --git a/src/renderer/shared/api/xcm/lib/multi-location-service.ts b/src/renderer/shared/api/xcm/lib/multi-location-service.ts
new file mode 100644
index 0000000000..e5d53694a9
--- /dev/null
+++ b/src/renderer/shared/api/xcm/lib/multi-location-service.ts
@@ -0,0 +1,68 @@
+import { type AbsoluteMultiLocation, type Junction, type RelativeMultiLocation } from './location-types';
+
+function areJunctionsEqual(junction1: Junction, junction2: Junction): boolean {
+  return JSON.stringify(junction1) === JSON.stringify(junction2);
+}
+
+function findLastCommonJunctionIndex(
+  location1: AbsoluteMultiLocation,
+  location2: AbsoluteMultiLocation,
+): number | null {
+  let lastCommonIndex = -1;
+
+  const minLength = Math.min(location1.interior.length, location2.interior.length);
+
+  for (let i = 0; i < minLength; i++) {
+    if (areJunctionsEqual(location1.interior[i], location2.interior[i])) {
+      lastCommonIndex = i;
+    } else {
+      break;
+    }
+  }
+
+  return lastCommonIndex >= 0 ? lastCommonIndex : null;
+}
+
+function reanchorAbsoluteLocation(
+  location: AbsoluteMultiLocation,
+  pointOfView: AbsoluteMultiLocation,
+): RelativeMultiLocation {
+  const lastCommonIndex = findLastCommonJunctionIndex(location, pointOfView);
+  const firstDistinctIndex = lastCommonIndex !== null ? lastCommonIndex + 1 : 0;
+
+  const parents = pointOfView.interior.length - firstDistinctIndex;
+  const interior = location.interior.slice(firstDistinctIndex);
+
+  return {
+    parents,
+    interior,
+  };
+}
+
+function restoreAbsoluteLocation(
+  relativeLocation: RelativeMultiLocation,
+  pointOfView: AbsoluteMultiLocation,
+): AbsoluteMultiLocation {
+  if (relativeLocation.parents < 0) {
+    throw new Error('Parents cannot be negative');
+  }
+
+  if (relativeLocation.parents > pointOfView.interior.length) {
+    throw new Error(
+      `Invalid relative location from given pov: ` +
+        `Relative location has ${relativeLocation.parents} parents whereas pov has only ${pointOfView.interior.length} junctions`,
+    );
+  }
+
+  const base = pointOfView.interior.slice(0, pointOfView.interior.length - relativeLocation.parents);
+  const resultJunctions = [...base, ...relativeLocation.interior];
+
+  return {
+    interior: resultJunctions,
+  };
+}
+
+export const multiLocationService = {
+  reanchorAbsoluteLocation,
+  restoreAbsoluteLocation,
+};