Transfer Pricing

Some Transfer Pricing regulations are modified under Polish New Deal provisions, with the view of in particular limiting the bureaucracy.

Below we present selected key changes that may be interesting from point of view of foreign investors or Tax Directors.

For more information on certain local / compliance changes, please do not hesitate to contact our Transfer Pricing experts.

Extension of certain deadlines

• Deadline for the submission of local Transfer Pricing documentation by the taxpayer is extended to 14 days at the request of the tax authority (currently 7 days). 
• The deadline for preparing local TP documentation is extended to the end of the 10th month after the end of the entity’s tax year (currently 9 months). 
• The deadline for filing TCP-R information is extended to the end of the eleventh month after the end of the entity’s tax year (currently 9 months). 

Local file – extension of exemptions

The new list of transactions for which local TP documentation is not obligatory is broadened by: 

• domestic transactions with a PE; 
• transactions covered by, i.a. a tax agreement concluded under a co-operative compliance program or Investment Agreement; 
• transactions covered by the safe harbour mechanism for loans, credits, bonds and low added value transactions; 
• so-called pure reinvoicing payments (but under additional conditions). 

Local file – value of transactions

Clarification of the transaction value for certain operations.  

• In case of a deposit, loan or credit, the transaction value will refer to the value of the capital,  
• in case of insurance or reinsurance contracts to the sum insured 
• in case of a non-legal entity to the total value of the contributions made to the non-legal entity.  

The controlled transaction should be declared at its net value (i.e. without VAT), unless based on VAT provisions the VAT does not constitute input tax or does not constitute input tax in the part in which the taxpayer is not entitled to a reduction in the amount or a refund of the VAT difference. 

Statement on the preparation of local TP documentation merged into TPR-C report

• In the statement on the preparation of local TP documentation, which will constitute part of the TPR-C report, the taxpayer declares that the local transfer pricing documentation was prepared in accordance with the actual state of affairs, and that the transfer prices covered by the documentation are determined on terms and conditions that unrelated entities would determine between themselves. 
•  The arms length’s principle will also be met in the case of gratuitous/partially paid for benefits, if the income from such benefits was recognised for tax purposes. 

It is however worth noting that elimination of the statement on preparation of local TP documentation as a separate is linked with the modification of penal fiscal sanctions on local TP documentation and TP information.  

The penalties for preparing documentation inconsistent with the actual state and failure to attach Master File documentation, can vary (depending on the incompliance nature), with a theoretical maximum amounting to PLN 26.8 m (approx. EUR 6.2 m). 

It is also worth to mention that the TPR will have to be signed by a designated board member in case of a multiperson board and it cannot be singed by a proxy unless it is a qualified proxy e.g a tax advisor or legal counsel. Importantly, designating a person belonging to a multi-person body to sign information on transfer pricing does not relieve other persons belonging to this body from responsibility

Master File – elimination of revenues’ limit

• New provisions eliminate the revenues’ threshold above which related parties obliged to prepare a local file which financial statements are subject to consolidation are required to submit the Master File. 
• Master File will have to be submitted by the end of 12th month after the end of the entity’s tax year.