Submission of an incomplete transfer pricing documentation file (e.g. without a benchmarking study) entitles tax authorities to proceed to their own assessment of taxpayer’s transfer prices. Such transfer pricing assessment procedure may result in significant adjustments of the transfer prices applied in related party transactions. Therefore, related parties are advised to prepare their own benchmarking studies and avoid facing tax authorities applying their own assessment procedure in disregard of the particularities of the taxpayer.

Moreover, not preparing a benchmarking study when entering into a new type of intra-group transaction where you need to set up the transfer price could backfire in the future. For example, for a transaction consisting in provision of investment portfolio management (a high value added activity) setting the transfer price as cost plus 5% mark-up just because the 5% mark-up is commonly used within multinational companies would trigger transfer pricing adjustments during a future transfer pricing inspection. Why? Because when the tax authorities will check the profitability in this segment of industry under their own benchmarking studies will probably find out that 5% is not enough. Instead, if the taxpayer had prepared this study before setting its transfer price, it would have avoided the adjustment.