Transfer Pricing in Poland

Warsaw, 9 January 2017

From the year 2017 onwards, the obligation to prepare transfer pricing documentation between related companies will remain only with the entities whose revenue in the previous fiscal year exceeded EUR 2 million and only with regard to transactions of value exceeding EUR 50 thousand.

This change means that the Polish tax authorities are going to focus on large entities and transactions when considering transfer pricing issues. Consequently, the smaller companies will be released from the burdensome obligation to prepare tax documentation for every transaction within their capital group. The set of rules which are coming into force in Poland are similar to the measures implemented in the UK, Germany, France, Austria, Portugal and Luxembourg.

Additionally, the entities with revenues over EUR 10 million are required to submit a simplified report on related party transactions. The purpose is to present with the use of data from independent sources that the price in a related party transaction was an ‘arm’s length’ price.

Taxpayers with revenue over EUR 20 million will be obliged to prepare additional documentation on the entire group they form part of, including description of business activity, organizational structure, transfer pricing policy, financial condition and relevant tax agreements.

The largest entities (capital groups the revenue of which exceeds EUR 750 million) will further need to submit special reports on the business activity, the income and the tax paid by all the subsidiaries and foreign establishments of the group. This obligation concerns any tax year started after 2015.

In conclusion, starting with 1 July 2017 large businesses should be prepared to provide tax authorities with complete data in a single file. If they fail to answer on time established by the authorities, they may be subject to fines.