Benchmarking analysis or compliance analysis – how to report in the TPR form?

One of the key elements of transfer pricing documentation is a transfer pricing analysis. It can be prepared in the form of a benchmarking analysis or in the form of a compliance analysis.

The transfer pricing analysis must include (with justification for selection):

  • transfer pricing verification method;
  • selected party or transaction to be investigated;
  • a description of the benchmarking analysis or a description of the compliance analysis;
  • relating the result of the analysis to the determined transfer price.

Benchmarking analysis

The benchmarking analysis is based on a comparison of the transfer price/financial ratio achieved in a controlled transaction with comparable data on non-controlled transactions between unrelated parties in the market. This can be benchmarking data of an internal or external nature.

The benchmarking analysis must include (with justification for selection):

  • a description of the process of identifying benchmarking data and data sources;
  • benchmarking data in electronic form;
  • information about using data from multiple years or a single year;
  • selected financial indicator;
  • description of comparability adjustment;
  • point or interval and the statistical measures used.

Compliance analysis

Compliance analysis is performed when it is not possible or appropriate to prepare a benchmarking analysis. Compliance analysis can be a study that directly or indirectly indicates that the controlled transaction is consistent with the terms that unrelated parties would have agreed among themselves. It should logically, based on economic rationale and the characteristics of the transaction, indicate the marketability of the terms of the transaction. For this purpose, a verbal description, tables, diagrams or graphs can be used.

How to report the analysis performed in the TPR form?

Benchmarking analysis and compliance analysis share the common goal of confirming that the transfer price in a controlled transaction is consistent with the price that would be concluded between independently operating entities in the market. They differ primarily in form – formalized in the case of benchmarking analysis with specific elements indicated, and flexible in the case of compliance analysis, where basically anything that justifies the marketability of the transaction can be included.

Sometimes, however, when preparing a transfer pricing analysis, particularly based on internal data, a taxpayer may encounter the problem of whether it was appropriate to report the analysis performed in the TPR form as a benchmarking analysis or as a compliance analysis. In some cases and the transfer pricing verification methods used, the line can be very thin.

To this end, it should first be verified whether the analysis contains all the mandatory elements for a benchmarking analysis. Indeed, if it is possible to perform a benchmarking analysis in a given situation, it is appropriate to do so, and it should be reported anyway. In practice, this involves indicating more information than in the case of a compliance analysis – such as, for example, the calculated market range and its type.

However, only when the taxpayer comes to the conclusion that in a particular case it is not possible to conduct a benchmarking analysis and is able to justify this reliably, it will be appropriate to report the transaction as a compliance analysis.


Senior Manager, Transfer Pricing Team

Tel.: +48 501 141 923