As of January 2021, new TP rules concerning transactions with parties registered in tax havens were introduced. New rules require additional documentation from taxpayers that conduct a transaction (directly or indirectly) that exceed relevant thresholds, with any person or entity located in a tax haven.

There are two situations were a Polish tax payer may be obliged to prepare TP documentation:

  1. A taxpayer/non-corporate entity makes a controlled transaction (i.e. with a related party) or a transaction other than a controlled transaction (i.e. with an unrelated party) with an entity that has its place of residence, registered office or management in the territory or in a country applying harmful tax competition - then, if the transactions are above PLN 100 k, there is an obligation to prepare the documentation (together with the transfer pricing analysis), submit a TP statement (confirming that TP documentation was prepared) and TPR.
  2. A taxpayer/ non-corporate entity makes a controlled transaction or a transaction other than a controlled transaction, and the beneficial owner has a domicile, registered office or Management Board in the territory or in a country applying harmful tax competition - then, if the transactions are above PLN 500 k, there is an obligation to prepare the documentation (together with transfer pricing analysis), submit a TP statement and TPR.

    Importantly, it is presumed that the beneficial owner has a place of residence, registered office or management in the territory or country applying harmful tax competition, if the other party to the transaction, in the tax year or financial year, makes settlements with an entity having its registered office or management in the territory or country applying harmful tax competition. A taxpayer or a non-corporate entity is obliged to exercise due diligence while determining such circumstances.

In both cases the documentation is to additionally contain the economic justification for the transaction, which in the light of the executive regulation includes information on both the economic and tax benefits obtained in connection with the transaction.

The Polish Ministry of Finance presented for public consultation a draft of official clarifications to better outline what should be understood as a beneficial owner and due diligence in this case. The public consultation ended in April and raised numerous practical disputes. Both the new rules and wording of the draft clarifications are far-reaching and may result in significant compliance burden, disproportionate to the results achieved (CRIDO experts were supporting the International Group of Chambers of Commerce[1] in the public consultation process and submitted substantial comments to the draft clarifications along with proposals of necessary changes).

We will be analyzing the impact of this new, unprecedent rules in our webinar which will take place on 15 June. The webinar will be held in English. Please contact us if you wish to register, or follow the link below.

Webinar >> Transfer pricing scrutiny in Poland – stairway to tax haven or highway to compliance hell?

[1] The International Group of Chambers of Commerce is a  united platform of communication for the international business community with the Polish Government, consisting currently of 16 Chambers of Commerce operating in Poland.