Is it enough to update transfer pricing analyses once every three years?

Comparative analysis, also referred to as benchmarking analysis, is basically a key element of a transfer pricing documentation. Its purpose is to demonstrate that a given controlled transaction was made in accordance with the arm’s length principle. A correctly prepared analysis is therefore a security for the taxpayer in case allegations are raised by tax authorities in the course of a tax inspection that the transaction is not arm’s length.

That is why it is so important to have a high-quality benchmarking analysis that is up-to-date in the light of applicable regulations.

How often should the benchmarking analysis be updated?

You will find the answer in Article 11r of the CIT Act whereby the benchmarking analysis and the compliance analysis are updated at least every 3 years, unless a change in the economic environment significantly affecting the prepared analysis justifies updating it in the year of the change.

Therefore, the CIT Act introduces two conditions affecting the need to update a benchmarking analysis: (i) every three years, (ii) unless there were economic reasons taking place earlier that would trigger the need for updating it in a given year (i.e. in the year of these changes).

Setting a 3-year validity period of a benchmarking analysis

Contrary to appearances, the regulations do not specify how to calculate the three-year period for the comparative analysis to be used. The most common approach is to use the benchmarking analysis for the transaction documented in three consecutive years. This means that if you want to confirm that the terms of a given transaction are arm’s length in the next year (when the analysis was used as part of fulfilling the obligations in three consecutive years), you should update your analysis for that transaction.

Under a more liberal approach, the three-year period specified in the CIT Act is calculated from when the comparative analysis is prepared or from the date of downloading comparative data from an external database for the purpose of preparing the analysis.

However, the reality is not always so simple and the lawmaker has introduced a second condition that makes it necessary to update comparative analyses.

Analyzing the impact of changes in the economic environment

The second criterion set in Article 11r of the CIT Act concerns changes in the economic environment that significantly affect the comparative analysis. This refers to external factors and conditions that significantly affected the taxpayer’s business operations and its business environment.

An example of such changes are events that took place in the years 2020-2022 since these significantly impacted on both the local and global economy. However, the impact was not the same for every industry. For some sectors of the economy, the changes had a positive impact on their economic situation, for others negative, and for some the impact was not significant. Nevertheless, regardless of the actual impact of the changes, they should be taken into account when verifying the validity of the comparative analyzes held.

The events that strongly affected the economic reality in Poland in 2022 are primarily Russia’s invasion of Ukraine and high inflation (caused by the COVID-19 pandemic and the said armed attack). They had (and continue to have) an impact on limited access to certain raw materials, an energy crisis, an increase in the cost of financing loans and a drastic increase in the cost of living in Poland, which is also associated with an increase in the cost of doing business.


How changes in the economic environment impact on the need to update benchmarking analyzes often seems to be overlooked by taxpayers and even some consulting companies that prepare benchmarking analyzes for them (even though the information is disclosed, among others, in financial statements).

Given how dynamic changes in the markets have been in recent years, economic changes affecting our everyday life simply cannot be ignored. Therefore, when determining the transfer pricing obligations for 2022, it is necessary to review whether the analyzes held are up to date: in terms of the validity of the three-year period specified in the Act and the impact of changes in the economic environment on transactions with related parties.

We do realize that a thorough analysis of how the economic situation affected the taxpayer’s business activity may not be easy and may raise additional questions. However, the effort put and cost involved even in an annual updating of benchmarking analyzes may be much lower than the consequences of the tax authorities challenging their validity in case of an inspection.


Jakub Raszka

Consultant, Transfer Pricing Practice

Tel.: (+48) 503 975 554