Comparability adjustment – how to make your benchmarking analysis more reliable?

One of the key matters for preparing a benchmarking analysis is the comparability of underlying data.

What if the data are not perfectly comparable?

If that is the case, it may be necessary to apply comparability adjustments

When comparability adjustment is a good thing?

The comparability adjustment seeks to increase the reliability of a benchmarking analysis. The idea is to achieve a greater degree of comparability between the transaction under review and transactions made by third parties.

As clarified by the Ministry of Finance, comparability adjustments are possible when:

  • they result in a higher degree of data comparability in controlled transaction using the appropriate transfer price verification method
  • comparability differences will be quantifiable.

When an adjustment is impossible, a red light flashes

There may be situations when an adjustment proves unjustified as the following example:

Company X sells printer ink to a related party of Company Y in wholesale quantities. In order to compare the prices set in the transaction under review with those set by third parties, Company X uses a price list published by the printer ink manufacturer. Importantly, the price list features only retail prices used in transactions with individual customers.

In this example, the comparability adjustment is not appropriate. This is because the prices are set at different market levels within the value-added chain (comparison of retail and wholesale prices). In this case, differences between market levels in functional terms cannot be adjusted.

FCT Recommendations are insightful to better understand what to consider to assess the appropriateness of making a comparability adjustment. According to them, key factors to be analyzed include:

  • significance (level) of differences due to which a adjustment is considered;
  • the quality of data to be adjusted;
  • the ability to secure a reliable means of making the adjustment.

Whenever reasonable adjustments to eliminate differences in comparability are not possible (e.g. different market level, etc.) or where the adjustment does not increase the reliability of the results, resampling or using a different transfer price verification method should be considered.

Taxpayers should bear in mind that the need to make numerous or significant adjustments may indicate that third parties are making transactions or conducting activities that are in fact not sufficiently comparable to the controlled activity/transaction. Thus, it should not be included in the benchmarking analysis.

More details about the comparability adjustment in the new TPR

Although the new TPR form for fiscal year 2022 has not yet been published, significant changes are clear from the wording of the new Regulation – also in terms of comparability adjustments.

Last year, taxpayers were only required to state whether a comparability adjustment was part of their benchmarking analysis.

For 2022, taxpayers must also state in the TPR whether, due to the comparability adjustment:

1) the result of the analysis has changed by less than 30%,

2) the result of the analysis has changed by 30% or more, or

3) no such impact can be determined.

Choosing the second option may raise the interest of the authorities

So, it’s a good time now to review your benchmarking analysis to eliminate any potential risks associated with adjustments that materially alter the results.


Marta Klepacz

Senior Manager, Transfer Pricing Practice

+48 533 889 036