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Katarzyna Klimkiewicz-Deplano
Katarzyna Klimkiewicz-Deplano
Managing Partner, Tax Advisor
Katarzyna is Managing Partner of Advicero, certified tax advisor since 2003. Katarzyna provides tax advice in Polish, English and German language.
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Aleksandra Wos
Senior Manager, Tax advisor
A specialist in income tax and value added tax.
Transfer pricing QUESTIONS AND ANSWERS

TRANSFER PRICING REQUIREMENTS

On 1 January 2017 new transfer pricing regulations came into force. As of that date Polish taxpayers are obligated to prepare transfer pricing documentation according to newrequirements.

These changes are in majority a transposition of Base Erosion and Profit Shifting (BEPS) Action Plan prepared by the OECD, which aims to avoid aggressive tax optimization resulting in little or no overall corporate tax being paid.

Main changes in transfer pricing provisions include:

  • obligation to prepare new types of TP documentation (local file, benchmarking study, master file etc.), with additional items to be covered
  • obligation to submit a statement on preparation of TP documentation
  • obligation to submit return on transactions with related parties (CIT-TP form), as well Country-by-Country Reporting
  • new TP thresholds calculated on accounting revenues/costs basis
  • new deadlines to prepare of TP documentation
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WHAT ARE THE NEW TYPES OF transfer pricing documentation

New types of TP documentations and declarations introduced by currently binding regulations:

LOCAL FILE

Standard TP document, comparable to the one prepared based on regulations in force until the end of 2016, some requirements were modified or extended.

Additional analysis prepared when revenues or costs of a taxpayer exceed EUR 10 million

Master file is prepared in reference to group of entities when revenues or costs  of a taxpayer exceed EUR 20 million. The documentation is prepared at the group level, covers structure, functions etc.

Separate form presenting information about entities from the whole group (applies to groups whose consolidated revenues exceed EUR 750 million), filed by consolidating entity.

New return concerning intra-group transactions, submitted annually (covers taxpayers whose annual revenues / costs exceed EUR 10 million)

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PRICING DOCUMENTATION
WHEN ENTITIES ARE CONSIDERED AS RELATED PARTIES?

Entities are considered as related parties primarily based on capital relations. The threshold of the direct or indirect participation amounts now to 25%. Nevertheless other relations, such as personal (in particular: family) connections between individuals holding specific positions in different entities, are also considered.

Moreover, entities conducting business activity in the form of partnerships (not being legal persons) have become subject to documentation requirements.

WHAT IS THE DEADLINE FOR PREPARING TRANSFER PRICING DOCUMENTATION?

Deadline for preparing TP documentation falls on the date for submitting the annual corporate income tax return, which is 3 months after year-end.

Management board will be obliged to sign a statement confirming preparation of TP documentation within this deadline.

As a rule, TP documentation should be disclosed within 7 days upon tax authorities’ request.

WHAT TRANSACTIONS REQUIRE TRANSFER PRICING DOCUMENTATION?

Obligation to prepare TP documentations applies to:

  • transactions with significant impact on taxpayers’ activity – basic materiality level is EUR 50k and increases depending on the amount of the taxpayer’s revenues and costs for the preceding tax year (the ultimate materiality level is EUR 500k),
  • other events registered in the accounting books having a significant impact on the taxpayer’s income, which have been conducted between the related entities

As a rule, taxpayers whose revenues or costs (accounting) did not exceed in the year preceding the tax year the equivalent of EUR 2 million, will not be required to prepare tax documentation.

Exceeding the threshold of EUR 2 million results in such an obligation in the next fiscal year, even if the values in the year for which the taxpayer is required to prepare documentation, are lower.

We present you
proprietary tool
Advicero Tax

Designed to facilitate the identification of documentation obligations in terms of prices transfer rates based on the provisions from January 1, 2017. The verifier is used in particular, companies keeping accounting books and allows in a simple way assess whether a given entity is subject to new regulations.

CHECK YOUR TRANSFER PRICING OBLIGATION  

We present you with the proprietary Advicero Tax tool created to facilitate the identification of documentation obligations in the field of transfer pricing based on the regulations effective from January 1, 2017.

The verifier in particular serves companies that keep accounting books and allows you to easily assess whether a given entity is subject to new regulations.

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Revenues, determined on the basis of accounting books, achieved in the year preceding the selected tax year
Revenues, determined on the basis of accounting books, achieved in the tax year x -2
Costs determined on the basis of accounting books incurred in the year preceding the selected tax year
Costs determined on the basis of accounting books incurred in the tax year x -2
Does the company belong to an international capital group
Enter consolidated group revenue
In the selected tax year, did the company enter into transactions with an entity resident, registered office or management in the territory of or in a country applying harmful tax competition?
Please enter the transaction value
In the selected tax year, has the company concluded a non-corporation contract, a joint-venture agreement or other similar agreement with a resident, registered office or management in the territory of or in a country that applies harmful tax competition?
Please provide the value of the contributions to the company or the value of the joint venture

Documentary obligations of the company

We would like to remind you that the tax authority may ask the taxpayer to prepare and submit tax documentation for transactions or other events whose value does not exceed the set limits in the event of circumstances indicating the probability of understating their value in order to avoid the obligation to prepare tax documentation. In this case, the taxpayer will be required to prepare and submit the tax documentation, within 30 days from the date of receipt of such a request.

The result of the Transfer Pricing Verifier is supportive and does not constitute legal or tax advice. Advicero Tax is not responsible for applying the user to the results of the analysis without prior use of professional legal and tax advice.

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