Changes within the framework of the Polish New Deal may also affect transfer pricing

July 9, 2021 Poland

On the website of the Ministry of Finance (MF) has been published another package of legislative proposals in connection with the announced Polish New Deal. This time, the proposals of the MF will concern transfer pricing. In principle, the aim of the proposed changes is to make it easier for taxpayers to meet their transfer pricing obligations. However, among the announced changes the MF also proposes solutions that in their present form may potentially broaden the scope of TP obligations.

At the moment, the draft amendments proposed by the MF are at the stage of pre-consultations. Therefore, the final form of the proposal may be subject to significant changes. ASB actively participates in the ongoing consultation process, proposing its own legislative solutions, positive for taxpayers.

Below we present a summary of the most important possible changes indicating their current form and the MF’s proposals.

Deadline for meeting TP obligations
Current form
9-month deadline after the end of the tax year to prepare local file, sign and submit TPR information and TP statement.
Proposal

  • 10 months after the end of the tax year to prepare a local file
  • 11 months after the end of the tax year for submission of TPR information

Deadline for submitting TP documentation to the tax authorities
Current form
7 days from receipt of a request.
Proposal
14 days from receipt of a request.


Changes to exemptions from preparing TP documentation
Current form
Permanent establishments located in Poland do not benefit from any specific regulation exempting them from the obligation to prepare transfer pricing documentation in case of transactions with domestic entities.
Proposal

Exemption from the obligation to prepare documentation for transactions:

  • between permanent establishments located in Poland that are related to related entities seated in the EU or EEA
  • between permanent establishment located in Poland and its related entity seated in Poland

provided that tax-deductible costs/tax revenues resulting from the transaction are allocated to the permanent establishment and the same conditions are met as in the case of exempting domestic transactions under Art. 11n(1) of the CIT act.

Current form
Exemption for transactions covered by an APA.
Proposal
Extension of this exemption to investment agreement (i.e. a proposed institution of Polish New Deal obtained under Interpretation 590) and tax agreement.

Current form
No exemption for re-invoice transactions.
Proposal
Exemption for re-invoice transactions under the conditions:

  • no value-added and no imposition of a margin/mark-up
  • no allocation key application
  • the settlement cannot be related to another controlled transaction
  • immediate settlement of the transaction with an unrelated entity upon the payment
  • the related entity is not seated in a tax haven

Change to exemptions from the preparation of benchmarking analysis
Current form
No special exemptions for small and micro-enterprises.
Proposal
Exemption for small and micro enterprises from benchmarking.

Current form
Obligation to prepare to benchmark analysis for transactions other than controlled conducted with entities from tax haven or transactions whose beneficial owner is seated in a tax haven.
Proposal
Limiting the obligation for transactions other than controlled conducted with entities from tax haven or transactions where the beneficial owner is seated in a tax haven only to the preparation of local file without benchmarking analysis.


Change in the scope of TP obligations
Current form
Obligation to sign and submit a TP statement on the preparation of local file and transaction’s arm’s length.
Proposal

  • Elimination of the obligation to sign and submit the TP statement
  • Moving the TP statement’s substance to the TPR information
  • Easing of signing the TPR information

Current form
Reporting in the TPR information of transactions subject to TP obligation and benefiting from the exemption provided for domestic transactions.
Proposal
Expanding the scope of reporting in the TPR information to include transactions that would benefit from the documentation exemption under the amendments.

Current form
Transactions conducted with non-residents are subject to separate similar and obligatory reporting under multiple provisions.
Proposal
Those required to submit TPR information would be exempt from submitting similar information (under ORD-U, APA-P or APA-C) to the authorities.

Exception! Transactions with entities in tax havens do not benefit from this.


The scope of relations between related entities
Current form
Holding 25% of shares results in an entity being considered related.
Proposal
Extension of scope of related entities to partners of limited partnerships and limited joint-stock partnerships regardless of holding 25% of shares.

Current form
Having a significant influence refers only to the concept of profit sharing.
Proposal
Having a significant influence would refer not only to the concept of profit-sharing but loss-sharing as well.


Calculation of transaction value
Current form
VAT should be excluded when the transaction value is calculated.
Proposal
As a rule, the transaction value is calculated excluding VAT, except in certain situations where the tax is not neutral for the purposes of CIT.

Current form
Specific regulations as to the calculation of transaction value apply only to credits, loans, guarantees, and the allocation of income (loss) to a permanent establishment.
Proposal
Setting up of detailed regulations as to the calculation of transaction value of:

  • Deposit - as the value of the principal
  • Insurance or reinsurance contract - as the value of sum insured

Other changes
Current form
Preparing local documentation and submitting TPR information after the deadline is punishable by a fine of up to 720 daily rates.
Proposal
Preparing local documentation and submitting TPR information after the deadline is to be punished with a fine of up to 240 daily rates.

Current form
Mandatory attestation of TP adjustment in annual return.
Proposal
No obligation to make a TP adjustment in the annual return. Possibility of replacing the related entity's statement on the adjustment with an accounting document.

Piotr Szeliga
Piotr Szeliga Tax Manager - Tax Adviser
ASB Poland
pszeliga@asbgroup.eu