Transfer pricing benchmarking 2024 – how to prepare an analysis that will withstand a tax audit

Transfer pricing analysis forms the backbone of the Local File and the TPR (Transfer Pricing Report) form. Find out how to avoid income reassessments and prepare an analysis robust enough to pass a customs and tax audit.

Introduction

At first glance, everything appears to be in order. The company’s results fall within the range. Documentation is in place. The TPR was submitted on time. And yet – during an audit, the tax authorities demand detailed explanations. They raise concerns regarding the selection of comparables, the results range, and the choice of indicators. The result? An upward income adjustment.

Is this an isolated case? Unfortunately not. Such situations are increasingly common – some even end up in court, as confirmed by our recent review of 2024 transfer pricing rulings.

Benchmarking: a requirement and a cornerstone of documentation

31 October 2025 is the deadline for preparing the Local File for the 2024 financial year, for taxpayers whose financial year aligns with the calendar year. Alongside this, except for a few exemptions, a transfer pricing analysis must be prepared – either a comparability analysis or a compliance analysis. Not a draft. Not a working version. A complete analysis, ready to stand up to scrutiny.

This raises key questions:

• Does our analysis take into account any changes in the transaction or market environment?
• Is the quality sufficient to justify submitting the TPR with a declaration by the management board that the prices are at arm’s length?

Group benchmark? Always worth verifying

Many taxpayers rely on benchmarking studies prepared centrally by their Group. These are sometimes of excellent quality – but not always compliant with local requirements. They shouldn’t be dismissed outright, but they should be checked for alignment with Polish regulations, inclusion of relevant comparables, and fulfilment of formal requirements.

What determines the quality of a benchmark?

A report might run to dozens of pages. But the strength of a benchmark lies not in its length, but in its precision, consistency, and logic. The key elements of a sound analysis include:

1. Careful transaction delineation – a loan and a credit facility are not the same.
2. Accurate functional profile – aligned with the company’s role in the transaction and in the Group’s value chain.
3. Appropriate method selection – consistent with the transaction logic and available data.
4. Comparable data – preferably drawn from professional databases (e.g. QTPA, TP Catalyst, RoyaltyRange, Bloomberg).
5. Selection criteria – transparent and well-documented.
6. Financial indicators – tailored to the nature of the business and clearly explained.
7. Result ranges – justified, logical, and verifiable.

Why can similar benchmarks be entirely different?

Benchmark reports may appear similar – the market has largely standardised their format. But appearances can be deceptive. The true differentiators lie in the quality of selection, data, and methodology – aspects that only become apparent during an audit. A benchmark is not just an Excel file labelled “for TPR” and reused each year. It is evidence of arm’s-length pricing – and must be defensible.

Worth knowing

• Benchmarks remain valid for three years – provided market conditions haven’t changed. Now is the right time to review whether your 2022 or later benchmarks are still current.
• Benchmark details are disclosed in the TPR – and the TPR is one of the key tools used to select entities for audit, feeding directly into the UCS risk algorithm.
• A benchmark is not merely a requirement – it’s a practical tool supporting business decisions on transfer pricing policy, transaction effectiveness, and financial planning.
• Generic benchmarks for multiple transactions carry risks – often failing to capture unique functions and risks. Overly general analysis may seem convenient today but pose risks tomorrow.

How we work at MDDP

Our benchmarks are based on professional databases, real functional profiles, documented selection processes, and carefully tailored financial indicators. Each analysis undergoes an internal quality review and Partner oversight.

Time for a Benchmark. Time for a Decision.

Before signing and submitting the TPR, one crucial question must be answered:
Was the transaction truly conducted at arm’s length?

Our analyses are used in TPR filings, APA procedures, and transfer pricing policies. They have successfully passed audits both in Poland and abroad.

If you want documentation that will stand up to scrutiny – contact us.