Transfer pricing in Poland
VON ZANTHIER & DACHOWSKI
Transfer pricing
We support our clients in the fulfilment of their transfer pricing (TP) obligations. In doing so, we focus on optimisation, safeguarding the interests and tax security of both parties to the transaction and do not limit ourselves to the interests of the Polish company alone. We work with our clients' management boards, finance departments and tax advisors to find the best possible solutions. Find out how we can help you.
Who do we support?
We can help you in particular if you are dealing with the following challenges:
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You do not know how to hedge transactions within your capital group (e.g. sale of intermediate products, goods or merchandise, cash pooling, provision of intangible services, borrowing, transfer of functions, risks or assets)
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You do not have adequate personal or technical resources, including access to commercial databases, for adequate TP reporting
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You need to check your position with a Polish tax advisor to ensure that your proposed allocation of income and expenses will not be challenged by the Polish tax authorities
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You fear financial, disciplinary and/or reputational liability if you make a binding declaration that the transfer documents you have prepared are true
How can we help?
We support our clients primarily in the following areas:
Identification of related parties
We analyse the organisational structures of the groups in order to determine the responsibilities in the TP area.
Review of the obligation to prepare transfer pricing documentation
We review whether the transactions carried out with related parties exceed the transaction thresholds that trigger the obligation to prepare transfer pricing documentation.
Preparation of TP documentation
We deal with the preparation of comprehensive TP documentation that meets the requirements of Polish regulations.
Adaptation of TP documentation of a foreign company to Polish requirements
We co-operate with TP departments of foreign subsidiaries to adapt their TP documentation (usually written in English or German) to Polish regulations.
Benchmarking
We carry out benchmarking analyses on the basis of commercial transaction databases.
Compliance analysis
We endeavour to carry out a comparative analysis for each order. For certain transactions we prepare a compliance analysis.
Development and implementation of a transfer pricing policy
We develop a transfer pricing policy that defines a framework for related party accounting. We define the pricing methodology, describe how to perform benchmarking analyses and set parameters for related party settlement. We also assist in the allocation of functions and risks to individual group companies, thereby safeguarding the interests of all parties involved in the transaction.
Review of transfer pricing activities
We analyse the conditions under which transactions with related parties are carried out and check whether they meet the arm's length criterion. On the basis of detailed analyses, we support clients in deciding on a possible transfer pricing (TP) adjustment. We also advise on the best way to document such adjustments, be it through an adjusted invoice or a note, and on their correct accounting for VAT and corporate income tax purposes.
Support in tax proceedings
We represent clients in CIT audits to review TP documentation.
Workshops and training courses in the field of transfer pricing
We organise face-to-face and online training courses on transfer pricing.
Learn more
Why is it worth it?
It's worth making use of our services, because:
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We work with capital groups:
We know the needs of international capital groups and have extensive experience in working with the management boards and finance departments of other countries
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Courageous in action:
We understand that TP documents involve two countries. Our goal is to ensure security on both sides of the transaction, not just on the Polish side
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Everything under control:
We offer solutions that include not only documentation, but also strategic international advice that ensures complete control over the transactions carried out within the group
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You know what you will pay:
We ensure budget transparency and predictability by setting a flat fee that excludes unexpected expenses.
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Your experts in Poland: transfer pricing
FAQ
What is transfer pricing (TP)?
Transfer pricing (TP) is a commonly used term that refers to the transaction terms applied between related parties, i.e. companies operating within the same group.
What are affiliated companies under Polish law?
Under Polish law, related parties are, for example:
• companies over which another company exercises a significant influence, e.g. by holding 25% of their capital
• companies over which a significant influence is exercised by the same other company, e.g. through a 25% stake in the capital of both or more companies
• taxpayer and its foreign permanent establishment
• a non-corporate entity and its shareholder
How should transfer prices be determined in Poland?
As a general rule, all transactions and events between related parties should take place on terms that would be accepted by independently operating companies on the market - the arm's length principle applies.
In practice, taxpayers rely on the OECD guidelines and the methods of Polish law to determine transfer prices. The most important methods for verifying transfer prices are:
• the comparable uncontrolled price method (CUP)
• the resale price method (RPM)
• the cost-plus method with an appropriate margin (the cost plus method - CPM)
• the transactional profit split method (TPSM)
• the transactional net margin method (TNMM)
The choice of one of the above methods usually depends on the type of transaction being carried out. For example, the cost-plus method is usually used for service transactions.
Who is obliged to prepare transfer pricing documentation in Poland?
Companies that carried out similar transactions with related parties in the tax year, the value of which was higher than in the previous year:
• PLN 10 million - in the case of a commodity transaction
• PLN 10 million - in the case of a financial transaction
• PLN 2 million - in the case of a service business
• PLN 2 million - in the case of transactions other than those mentioned above.
In addition, companies that carry out transactions with related and unrelated parties that have their residence, registered office or place of management in a country that applies harmful tax competition (the so-called "tax haven") must also prepare transfer pricing documentation. The thresholds for transactions in this case are:
• PLN 2.5 million in the event of a financing transaction
• PLN 500 thousand in the case of other transactions (except financial transactions)
Does Polish law provide for exceptions to the obligation to prepare transfer pricing (TP) documentation?
Polish law provides for a number of exemptions from the obligation to prepare transfer pricing (TP) documentation.
Examples:
• the transaction is between two Polish companies, where both companies have realised a taxable profit and neither company operates in a Special Economic Zone or Polish Investment Zone
• under certain conditions, if the transaction is a recharging of costs originally incurred by an affiliated company
• the subject of the transaction is a loan and the safe harbour conditions are met
• Services with low added value are the subject of the transaction and the safe harbour conditions are met
Does Polish law provide for simplifications in the preparation of transfer pricing (TP) documentation?
Companies that are micro and small entrepreneurs within the meaning of the Entrepreneurs Act are exempt from the obligation to prepare a benchmarking analysis and a compliance analysis. In order to be able to apply the simplification, the conditions for fulfilling the status of a micro and small entrepreneur in the relevant period must be checked. For example, it is possible to apply the above simplification for the year 2023 if the status of a micro or small entrepreneur was fulfilled in 2022.
What are the most important transfer pricing obligations in Poland?
The most important transfer pricing obligations in Poland include:
• the use of market prices for transactions with related parties
• once the documentation thresholds are exceeded, preparation of transfer pricing documentation (local files, including some companies that should prepare a benchmarking/compliance analysis)
• preparation of TPR-C transfer pricing information and timely submission to the relevant tax authority.
What are the most important legal deadlines in Poland in relation to transfer pricing?
The most important legal provisions on transfer pricing in Poland:
• the local transfer pricing documentation for the tax year should be prepared by the end of the tenth month after the end of the tax year
• the transfer pricing information of the TPR-C should be prepared and submitted to the competent tax authority by the end of the 11th month following the end of the tax year
When is the best time to start preparing transfer pricing documentation so that the obligations can be met within the legal deadline?
For companies whose tax year follows the calendar year and therefore the obligation to submit TPR-C information expires on 30 November of the following year, it is best to start work on the transfer pricing (TP) documentation in June.
What steps should be taken first to identify transfer pricing obligations?
Firstly, the transactions carried out with related parties should be identified and categorised into different types of transactions: Goods transactions, service transactions, financial transactions with a distinction between the purchase side and the cost side. The next step is to check whether these transactions exceed the documentation thresholds.
How should the TPR-C transfer pricing information be handled if it is not submitted on time?
Despite the fact that the TPR-C transfer pricing information was not submitted on time, this reporting obligation should be fulfilled as soon as possible. At the same time, taxpayers can declare their so-called active remorse in order to avoid negative consequences.
Despite the fact that the TPR-C transfer pricing information was not submitted on time, this reporting obligation should be fulfilled as soon as possible. At the same time, taxpayers can declare their so-called active remorse in order to avoid negative consequences.
As a rule, the TPR-C information in such a case is signed by the head of the company - a managing director. It is not permitted for the TPR-C information to be signed by an authorised representative, with the exception of a lawyer or tax advisor. Thus, the TPR-C information cannot be signed by the chief accountant (this was possible until 2022).
In which form is the transfer pricing information TPR-C submitted?
The TPR-C transfer pricing information can only be submitted electronically. The TPR-C information cannot be submitted via ePUAP, but must be submitted via the e-Declaration system.
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