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While in the realm of transfer pricing in Poland, the year 2025 will not bring groundbreaking changes, taxpayers will still be required to adhere to the existing regulations concerning the documentation and reporting of transactions. Increased scrutiny and growing interest from tax authorities in this area demand particular attention and precision in documentation from entrepreneurs. Business owners must be prepared to meticulously document transactions with related entities to avoid potential issues during tax inspections.
This is particularly crucial in the context of international business operations, where transfer prices may be a subject of heightened interest for tax authorities.
Below we present the key information in the area of transfer pricing in Poland.
Entities shall be deemed to be related entities where, directly or indirectly, significant influence is exerted.
Significant influence according to the CIT Act means:
Direct or indirect holding of at least 25%:
The natural person’s actual ability to influence key economic decisions of the legal person or a flawed legal person
Marriage or kinship or affinity to the second degree
Entities deemed as related are required to prepare transfer pricing documentation if the volume of individual transaction exceeds the value:
Regardless of the prerequisites for the existence of relationships between entities, transfer pricing regulations may be applied to transactions, agreements or undertakings with entities from tax havens:
The general concept of the transfer pricing documentation has been maintained. The three levels of reporting consist of:
Local file + benchmarking study
Master file
Country by Country reporting
Represents local documentation containing details of transactions or other events between the Polish company and other group companies disclosed in the accounting books.
The taxpayer is obliged to prepare transfer pricing documentation in the case of perform a controlled transaction with a related entity, if its value exceeds the threshold indicated in the Act.*
The local file shall include in particular:
*PLN 2/10 millions
Benchmarking study is an analysis of the settlements between unrelated entities in transactions all over the market deemed as comparable to conditions established in controlled transactions. Benchmarking study is usually prepared based on specialized databases and market reports.
Comparability analysis’ goal is to prove that the terms and conditions under which the controlled transaction was executed comply with those which would have been determined by unrelated parties (transaction complies with arm’s length principle).
Entities obliged to prepare a TP documentation (local file + benchmarking study) are required to submit the statement that:
Under the changes effective January 1st, 2022, the statement is included in the TPR return.
The taxpayers who execute both transactions subject to the documentation obligation and transactions exempted under Art. 11n (1) of Polish CIT Law are obliged to submit TP-R report.
Master file should be prepared by taxpayers:
The master file shall include the following:
The TPR return requires the taxpayers to provide a detailed overview of transfer pricing surrounding, including the financial indicators, ratios and information of a given entity based on financial statements.
TPR is an obligatory part for entities which conclude controlled related party transactions fulfilling the criteria for transfer pricing documentation (simply, as a rule: if you are obliged to prepare Local File – then you have to submit TPR), as well as (in a limited scope) entities qualifying for the so-called domestic exemption under which they are not obliged to prepare transfer pricing documentation.
The report on the global allocation of income and tax within the group (required for groups where the parent company consolidating the accounts is located in Poland) must be filed by the holding company if the consolidated revenues of the group exceed EUR 750 million.
The CBC-P notification is required to be submitted by each entity in the group to which the CbCR obligations apply. The CBC-P notification can only be submitted electronically, with the deadline set for 3 months following the end of the tax year.
According to the current regulations, the following categories of transactions are not subject to Transfer Pricing documentation:
Concluded by related parties having their registered office, place of residence, seat or management on the territory of the Republic of Poland, as long as they:
Concluded between foreign fixed establishments of related entities located in the territory of the Republic of Poland, having their place of residence, registered office or management board in the territory of a Member State of the European Union or another state belonging to the European Economic Area other than the Republic of Poland
Concluded by a foreign fixed establishment, located in the territory of the Republic of Poland, of an entity having its place of residence, seat or management board in the territory of a European Union member state or another state belonging to the European Economic Area, other than the Republic of Poland, with an affiliated entity having its place of residence, seat or management board in the territory of the Republic of Poland
For which APA has been concluded
Whose value does not constitute revenue or tax-deductible cost on a permanent basis (exceptions – financial transactions, capital transactions, investment, fixed assets or intangible assets transactions)
If the relationship results only from a connection with the State Treasury or local government units
In which the price was determined by means of an open tender on the basis of the Public Procurement Law
Consisting of the attribution of income to a foreign permanent establishment situated in the territory of the Republic of Poland by non-residents, if the regulations of relevant international agreements to which the Republic of Poland is a party provide that such income may be taxed only in a State other than the Republic of Poland
Between companies forming a tax group
Consisting only in making a settlement between related parties of expenses incurred for the benefit of an unrelated party, as long as they,
Constituting low added-value services – if the conditions set forth in art. 11f of Polish CIT Law are met or
Concerning a loan, credit or bond issue – if the conditions specified in art.11g of Polish CIT Law are met.
Generally, the transfer pricing methods accepted by the tax authorities are based on the OECD Guidelines. These methods are:
CUP (Comparable Uncontrolled Price Method)
Resale Price Method
Cost Plus
TNMM (Transactional Net Margin Method)
Profit Split Method
When selecting a price calculation method, taxpayer should make sure it is appropriate for the transaction. Since 2019, there is no obligation to use traditional methods before profit-sharing methods.
The new regulations also allow for the use of another method, including a valuation technique, if none of the five above methods can be used.
Since 1st January 2019, the so-called Safe Harbour provisions have been introduced into Polish transfer pricing regulations. Safe Harbour ensures that certain transactions executed by taxpayers will not be subject to adjustment, provided they meet the conditions specified by the legislator.
These transactions are:
Safe harbour for low value-added services could be applied where the cost mark-up for these services has been determined on the basis of the cost plus or TNMM method and is equal to:
Moreover, the service provider must not have its place of residence, registered office, or management in a tax haven. The recipient of the service should also possess a detailed service price calculation, which includes the type and amount of costs incurred, the method of allocation, the justification for the selection of allocation keys for all related parties using the services, and a description of the transaction, including an analysis of functions, risks, and assets.
In contrast, the conditions for applying the Safe Harbour provisions to loans require that the interest rate be determined based on the type of base interest rate and margin specified in the Minister of Finance’s notice. Additionally, the loan agreement must not include any provisions for remuneration other than interest payable to the lender, and the loan must not have a term exceeding five years.
The Ministry of Finance has decided that from January 1, 2025, for the purposes of safe harbour regulations for loan, credit and bond issues, the margin will be changed so that the maximum margin for borrowers will be 2,60 percentage points, while leaving the minimum margin for lenders at the current level of 2.00 percentage points.
It is important to note that, to benefit from the protection offered by the Safe Harbour provisions for loan transactions, the total level of liabilities or receivables of the company with related parties must not exceed PLN 20,000,000 or its equivalent in another currency. Additionally, the lender must not have its residence, registered office, or management located in a tax haven.
The regulations in force since 1st January 2022 have significantly modified the deadlines for the obligation to submit the TPR and to prepare the documentation itself. These obligations must be fulfilled until:
A separate TP statement will no longer be required.
In case of benchmarking study, the analysis should be updated at least once every 3 years (if the business circumstances change in a way affecting the analysis the benchmarking analysis should be reviewed earlier).
Moreover, according to the present regulations, the tax authorities may request the taxpayer to prepare documentation in respect of transactions / events even if the value does not exceed the limits, provided that the circumstances suggest that their value could have been underreported in order to avoid the documentation obligation. In that case, Transfer Pricing documentation should be submitted within 30 days of the request. This obligation does not apply to micro-entrepreneurs.
For the “standard” TP obligations (after exceeding the thresholds) taxpayers are obliged to present complete TP documentation within 14 days of the tax authorities’ request (previously : within 7 days).
The Country by Country reporting obligation applies to:
Polish entities, which simultaneously:
Entities not being the ultimate parent if there is no other entity designated to provide such information in the group if one of the following criteria are met:
According to the present tax regulations members of groups of entities will be obliged to:
The notification should be filed up to 3 months following the end of the reporting financial year of a group of entities. The new regulation* indicates what information should be included in the information about a group of entities.
The tax regulations provide fines for failure to fulfil these obligations (maximum amount: PLN 1 mln).
*The Regulation of the Minister of Finance of 13 June 2017 on the detailed scope of data to be included in the information about a group of entities.
Currently, the Advanced Pricing Agreement (APA) is issued at the discretion of the Head of the National Fiscal Administration (KAS). It serves as a confirmation of the selection and application of a method for determining transaction prices between related parties.
The primary advantage of obtaining such a decision is the elimination of the risk of transfer pricing methodology being challenged, provided the taxpayer adheres to the APA provisions. It also offers protection from penal and fiscal sanctions for individuals responsible for tax settlements.
An additional benefit of an APA was the ability to recognize certain costs, such as low-value-adding services, as deductible under the limitations of Article 15e of the Polish CIT Law. However, since 2022, Article 15e has been repealed, significantly reducing the advantages associated with APAs.
Some further rules regarding APA are as follows:
The fee is 1% of the value of the transaction covered by the APA limited by the following:
Renewal fees are half of the amount of the fee for the renewed APA.
*1 EUR = 4.2730 PLN (ex. rate 31/12/2024)
Since 1 January 2019, new mechanisms have been introduced into Polish tax legislation, enabling tax authorities to estimate revenue more effectively. These mechanisms include:
The tax authorities may apply recharacterization or disregarding of a transaction if, in comparable circumstances, unrelated parties acting with economic rationality would not have entered into the controlled transaction in question.
When assessing such cases, the tax authorities consider the conditions agreed upon between related parties and whether those conditions prevent the transfer price from being set at a level that would have been agreed upon by economically unrelated parties, based on realistically available options.
The potential effects of these mechanisms are as follows:
However, tax authorities are prohibited from using these tools solely due to:
The absence of comparable transactions between unrelated parties in similar circumstances.
To meet the taxpayers’ expectations, the legislator pointed out that a taxpayer can recognize a transfer pricing adjustment by changing the amount of revenues or expenses if the following cumulative conditions are met:
The cooperation agreements have been introduced to the Polish tax system due to the Act on Resolving Double Taxation Disputes and Concluding of Advance Pricing Agreements of 14th November 2019.
The cooperation agreement is intended to ensure that a taxpayer complies with tax law while maintaining transparency in their activities and mutual trust and understanding between the tax authorities and the taxpayer, taking into account the nature of the taxpayer’s business.
The agreement may be concluded by taxpayers with revenues of at least 50 million EUR. The main benefits of the agreement are:
The taxpayer, being a party to the cooperation agreement, has the opportunity to discuss (with the Head of the National Revenue Administration) important issues related to the tax settlements, such as:
At present, the sanctions for the use of non-market prices for transfer pricing in Poland are as follows:
Furthermore, the Fiscal Penal Code provides a fine up to 720 daily rates per day in the following situations:
On the other hand, 240 daily rates per day are provided in the following situations:
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