Contact
Marcin Jeliński

Tax adviser (Poland), Licensed appraiser
Senior Associate
Phone: +48 22 244 00 23
E-Mail

The Government Legislation Centre published on its website on 22 March a bill on resolving double taxation disputes and concluding advance pricing agreements ("the bill") regulating e.g. the simplified advance pricing agreement (APA) procedure, which had been long-awaited by taxpayers.

According to the bill, taxpayers may apply the simplified APA procedure to the following controlled transactions:

1. purchase of low value-added services and

2. payments for the use or the right of use of:

  • trademarks;
  • experience-based knowledge (information) which can be used as part of industrial, commercial, scientific or organisational activities (know-how).

It should be noted that the changes introduced in 2018 have limited for many taxpayers the right to fully deduct the tax costs of e.g. the purchase of intangible services from associated enterprises, thus increasing the taxable base. Only taxpayers who signed advance pricing agreements were exempt from the above limitations. So taxpayers waited for an act on the simplified APA procedure (as announced by the Ministry of Finance) which is supposed to be relatively fast and cheap.

Application for simplified APA

According to the presented justification for the bill, the procedure should be simplified by easing the requirements for documents to be attached to the application as regards selected types of transactions that involve a limited risk of base erosion or profit shifting.

The bill provides that the application for simplified APA will have to include the following information or documents:

  • information on the controlled transaction covered by the application, i.e. the description of the controlled transaction, the indication of the selected transfer pricing method along with a concise justification therefor and the calculation of the transfer price;
  • a statement explaining the economic reasons for the controlled transaction;
    a brief description of economic benefits of the controlled transaction covered by the application along with examples evidencing the achievement of those benefits;
  • a comparability analysis (benchmarking study) or a compliance analysis or
  • a statement that the applicant does not prepare a comparability or compliance analysis because the controlled transaction meets the criteria referred to in Article 11f of the CIT Act;
  • the proposed validity period of the simplified APA procedure.

The statements listed under b) and d) are to be signed by the entity’s manager in the meaning of the Accounting Act, who must also specify his function in those statements. According to the bill, the statements may not be submitted by attorneys. At the same time, the validity period of the simplified APA procedure may not be longer than 3 years. This period may be extended each time for a maximum of 3 tax years, unless the procedure elements have significantly changed. The fee for submitting the application for simplified APA or for its extension (renewal) is PLN 20,000.

The bill also provides for the option to change the application for simplified APA to the application for APA or vice versa depending on whenever the circumstances permit applying the simplified APA procedure or not.

Decision on simplified APA

Decision on simplified APAAs to how long the simplified APA proceedings should take, the bill says that they should be completed immediately, no later than 3 months of the date they were initiated. The proceedings should end with a decision which must include:

  • the controlled transaction;
  • the transfer pricing verification method;
  • the method of calculating the transfer price;
  • the critical assumptions adopted in the method to be able to precisely reflect the transfer price.


At the same time, according to the bill, no favourable decision will be issued if:

  • the application is for a controlled transaction completed before the application date;
  • the share of the applicant’s income in the revenues earned in at least 2 tax years out of the last three tax years is lower than 1%.

The bill additionally says that the simplified APA does not apply if the share of income in revenues is lower than 1% in the first two years of the APA's validity period.

Implications of the changes

The bill is expected to enter into force on 1 July 2019. At the same time, according to the bill’s provisions on the amendments to Article 15e(16) of the CIT Act, the taxpayer may enjoy the exemption from the limits as per Article 15e(15) also as regards the costs incurred in 2018 if he submits the application in 2019.
What is noteworthy is the fact that the simplified APA procedure will apply to a relatively few cases involving cost limitation (as per Article 15e of the CIT Act). Thus, taxpayers will be free to choose to use the regular APA procedure for costs not covered by the bill.

If you are interested in details of the changes described above, the members of the Rödl & Partner transfer pricing team are at your service in our offices in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw.

Marcin Jeliński,

Mateusz Zapalski

26.04.2019