Contact
Magdalena Tuszyńska

Steuerberaterin (Polen)
Associate Partner
Phone: +48 22 244 00 55
E-Mail

Marcin Jeliński

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

New transfer pricing documentation obligations have been in force since January 2017. The regulations are important to taxpayers who make controlled transactions whose value exceeds the statutory thresholds. The deadline for fulfilling the new obligations is generally the same as the deadline for filing an annual tax return. 

Considering the above deadline and how detailed the data have to be, we recommend that enterprises should intensify their actions to duly and timely fulfil the new documentation obligations.

In the recent months we have noticed a significant increase in the number of tax inspections and investigations into CIT accounts, including transfer pricing. We recommend that you check if you have the transfer pricing documentation prepared according to the old and binding rules with respect to transactions made in the periods open to potential inspections.

Below please find the summary of the current rules of drawing up transfer pricing documentation.

Increased capital relationship threshold

At present, enterprises are considered associated for transfer pricing purposes if, among other things, one enterprise holds, directly or indirectly, at least 25% of share capital in another enterprise.

New rules of drawing up transfer pricing documentation

The taxpayer has to document the following transactions and dealings made in the fiscal year:

  • transactions with associated enterprises 
  • other dealings disclosed in the books of account of the year and materially affecting the taxpayer's income (loss).

They include homogeneous transactions or dealings whose total value exceeds the equivalent of EUR 50 thousand in a fiscal year.

Floating transaction threshold

The obligation to prepare the documentation depends on:

  • the amount of revenues or expenses in the meaning of the accounting regulations, generated by the taxpayer in the previous fiscal year and calculated on the basis of the books of account;
  • whether or not the value thresholds determined for transactions/dealings of one type on the basis of the revenue level, are exceeded.

With respect to the taxpayers whose revenues in the previous fiscal year exceed the equivalent of:

  • EUR 2 million, but no more than the equivalent of EUR 20 million – transactions or dealings materially affecting the taxpayer's income (loss) will mean transactions and dealings of one type totalling more than the equivalent of EUR 50 thousand in the fiscal year plus EUR 5 thousand per every EUR 1 million of revenue in excess of EUR 2 million;
  • EUR 20 million, but no more than the equivalent of EUR 100 million – transactions or dealings materially affecting the taxpayer's income (loss) will mean transactions and dealings of one type totalling more than the equivalent of EUR 140 thousand in the fiscal year plus EUR 45 thousand per every EUR 10 million of revenue in excess of EUR 20 million;
  • EUR 100 million – transactions or dealings materially affecting the taxpayer's income (loss) will mean transactions and dealings of one type totalling more than the equivalent of EUR 500 thousand in the fiscal year.

Enterprises whose revenues or expenses in the meaning of the accounting regulations, calculated on the basis of the books of account, do not exceed the equivalent of EUR 2 million in a previous fiscal year, are exempt from the transfer pricing documentation obligation.

Partnerships

In the case of a partnership, the revenue and expense thresholds will be set for the partnership. Taxpayers who earn revenue from interest in a partnership will be allowed to designate a partner established or domiciled in Poland to compile the transfer pricing documentation of transactions and other dealings disclosed in the books of account. Nevertheless, this will not release the other partners from liability in the case of failure to provide the required transfer pricing documentation.

If a partnership is obliged to have the transfer pricing documentation in one year, it has to prepare it in the following year too, regardless of its revenues and expenses (in the meaning of the accounting regulations) in the year for which the documentation was prepared.

New taxpayers

Taxpayers who have only started their operations in the fiscal year and carry out transactions or other dealings which materially affect their income (loss) have to produce the documentation starting from the month following the month in which the revenues or expenses exceed the equivalent of EUR 2 million.

Taxpayers created in the following ways are not considered new taxpayers:

  • by transformation, merger or split; or
  • by transformation of a partnership; or
  • by natural persons who have contributed to the capital of the newly-established entity their old enterprise or assets of their enterprise worth in total more than the PLN equivalent of EUR 10 thousand.

Three-tier documentation

The current transfer pricing documentation is three-tiered and comprises:

  • local documentation (the local file) – in which the local associated enterprise presents details of transactions or other dealings with the other group components, disclosed in the books of account, including but not limited to:
    • details of the type and subject matter of those transactions or dealings;
    • financial figures, including cash flows in the transactions or dealings;
    • details of the associated enterprises involved in the transactions or dealings;
    • description of the transactions or dealings, including the functions performed by the taxpayer and the associated enterprises, the assets they use, including off-balance sheet assets, human resources and the risks assumed;
    • method and manner of calculation of the taxable person's income (loss); 
    • the justification of the choice, including the algorithm for calculation of the payments for the transactions or dealings, plus the method of calculating the payments affecting the taxpayer's income (loss);
  • group documentation (the master file) – containing information about the group, including without limitation:
    • details of the associated enterprise which prepares description of the associated group including the date it files the annual tax return;
    • organisational structure of the associated group;
    • description of the transfer pricing rules of the group (transaction pricing policy);
    • description of the group's business profile;
    • description of the intangible assets owned, produced, developed and used in the business activity;
    • description of the financial arrangement among the group members, including especially the consolidated financial statements of the associated enterprises within the group;
    • description of any agreements concerning income taxes made between the group components and the tax authorities in other countries, especially unilateral advance pricing agreements;
  • country-by-country reporting – a CbC report is supposed to provide aggregate information about income and the tax paid as well as business locations of the associated enterprises and foreign plants which belong to the group in the fiscal year. 

Taxpayers with revenues or expenses between EUR 2 million and EUR 10 million have to prepare the local file only. 

Taxpayers with more than EUR 10 million in revenues or expenses have to prepare also a benchmarking study and file a summary report on transactions and dealings with associated enterprises along with a tax return.

Taxpayers with more than EUR 20 million in revenues or expenses have to prepare also the master file, the taxpayers who earn consolidated revenues of more than EUR 750 million have to prepare a CbC report, in addition to the local file and the master file.

Deadline for preparing the transfer pricing documentation and management board's statement

The transfer pricing documentation must be ready no later than by the date of filing the tax return for the fiscal year. A member of the management board of a local enterprise has to sign a statement saying that the documentation is complete and has been prepared within the statutory deadline, and has to enclose the statement to the tax return.

Transactions within the thresholds

The tax authorities or the tax inspection authorities may request that the taxpayer prepare the transfer pricing documentation of transactions or dealings totalling less than the abovementioned limits if the circumstances suggest that the values may have been understated to evade the documentation obligation. The deadline for filing such a documentation is 30 days of the delivery of the authorities' request.

Any follow-up transfer pricing documentation of transactions and dealings materially affecting the taxpayer's income (loss) has to be periodically reviewed and updated in the subsequent years, at least once a fiscal year before the deadline for filing tax returns for subsequent years.

The benchmarking study has to be updated at least once every 3 years, unless the business circumstances change so much that a the study has to be reviewed in the year in which the change occurs. Taxpayers are also obliged to present the complete transfer pricing documentation within 7 days of the request from the tax authorities. 

In case of further questions, please do not hesitate to contact us. Our tax advisers in Rödl & Partner offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw will be happy to review your transfer pricing documentation and propose a solution to minimise your tax risks. We are also on hand to answer any other tax-related questions you may have.

Updated: 12.03.2018