TRANSFER PRICING ADJUSTMENTS

Businesses operating in Poland — or those planning to enter the market — must navigate complex transfer pricing (TP) regulations, including the proper handling of TP adjustments. These adjustments significantly impact tax settlements, reporting periods, and, in some cases, even the ability to recognize them for tax purposes. However, the ambiguity surrounding TP adjustments in Poland, combined with inconsistent case law, creates challenges for both companies and tax authorities.

Our expert team specializes in helping businesses comply with Polish TP regulations, ensuring that all adjustments are properly classified and documented to minimize risks and optimize tax efficiency.

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Transfer pricing adjustments

Transfer Pricing Adjustment refers to the modification / adjustment of a transfer price, understood as remuneration, financial result, financial ratio, or any other financially determined outcome of conditions established or imposed between related entities due to their mutual relationships.

The primary goal of a transfer pricing adjustment is to align the transfer price for a given period with the arm’s length principle, ensuring that it reflects market-level pricing in compliance with applicable regulations.

📌 General rules:

The purpose of TP adjustments is to align transfer prices for a given accounting period with the arm’s length principle. TP adjustment is retrospective in nature, refers to transactions completed in the past. As a rule, transfer pricing (TP) adjustments are made after the end of the relevant tax year. However, TP adjustments within the same tax year are not excluded and may be made during the year, after the end of another reporting period, such as a month or a quarter.

A key aspect to consider is that not every adjustment of transfer prices qualifies as a transfer pricing adjustment within the meaning of Polish regulations. The regulations define specific conditions for the admissibility of transfer pricing adjustments.

The distinction between TP adjustments under Polish regulations is crucial. An adjustment that does not qualify as a TP adjustment within the meaning of Polish law is not subject to the analysis under art. 11e of the Polish CIT Act. Such adjustments should instead be accounted for under general tax rules, meaning they must be recognized on an ongoing basis, i.e., in the settlement period in which the corrective invoice or another document confirming the reason for the adjustment is received.

📌 Transfer pricing adjustments should be accounted for as follows:

TP adjustment in plus → adjustment that increases income, either by increasing taxable revenue or reducing deductible expenses::

• Meets the conditions set out in Polish regulations → accounted for retrospectively, i.e., in the tax year/accounting period to which it pertains.
• Does not meet the conditions set out in Polish regulations → accounted for currently, according to general tax rules.

TP adjustment in minus → adjustment that reduces income, either by decreasing taxable revenue or increasing deductible expenses:

• Meets the conditions set out in Polish regulations → accounted for retrospectively.
• Does not meet the conditions set out in Polish regulations → cannot be accounted for under general tax rules and is not deductible as a tax expense.

The topic of TP adjustments becomes more complex when a company operates in a Special Economic Zone / Polish Investment Zone (SEZ / PIZ). It is also important to remember that when it comes to VAT and determining whether a transaction should be subject to VAT and how it should be documented, the rules are entirely different.

How can we help?

Crido’s support may include:

✅ Ensuring Compliance with Polish Regulations (TP, VAT) – verification whether TP adjustments meet the conditions outlined in art. 11e of the Polish CIT Act. This ensures that adjustments are properly classified, accounted for correctly (retrospectively or currently), and comply with tax regulations, reducing the risk of disputes with tax authorities.

✅ Optimizing TP Policies & Tax Efficiency – by analyzing historical TP adjustments, financial data, and benchmarking analysis, we can support businesses in optimizing their transfer pricing policies. This includes proactive planning, reducing the need for frequent adjustments, and identifying opportunities for tax-efficient structuring while ensuring compliance with Polish regulations.

Why choose CRIDO?

Expertise and Experience: With a team of over 40 highly qualified experts, we offer deep industry knowledge and diversified skills. The high quality of our work is recognized by numerous awards and distinctions, confirming our reputation as a trusted advisor.

Tailor-Made Solutions: We take a comprehensive and customized approach, leveraging the expertise of other CRIDO teams and our industry-specific experience to deliver solutions perfectly aligned with your business needs.

Involvement of Partners & Managers: Our partners and managers, each with many years of experience, are directly engaged in every phase of the project (including design of profitability adjustment mechanism). This ensures top-tier quality, efficiency, and a strategic approach to achieving your goals.

Proactive Updates & Regulatory Insights: Through active participation in legislative processes, we stay ahead of regulatory changes, ensuring that your business is always compliant and well-prepared for evolving tax and transfer pricing requirements. We keep our clients informed about the latest legislative developments and interpretative changes. This allows for a proactive approach in adapting to regulatory requirements and mitigating potential risks before they arise.

Contact us today to learn more about how we can assist you to achieve your business goals involving Poland in a safe way.