In the period from 2016 to 2019, the transfer
pricing regulations were changed on three separate
occasions, including with respect to the limits of
transactions subject to documentary obligations.
Article 9a of the Corporate Income Tax Act (“CIT
Act) in its wording binding until 31 December 2016,
stated that the documentary obligation applied to
transactions carried out by taxpayers with related
entities (or transactions under which receivables
resulting from the transaction were paid to an
entity having a place of residence, a registered
office or a management office in the territory of or
in a country applying harmful tax competition),
whose total amount resulting from the contract or
the total amount of benefits actually paid in the
tax year exceeded the equivalent of:
1) EUR 100,000 – if the value of the transaction
does not exceed 20% of the share capital,
calculated in accordance with Article 16(7) of
the CIT Act, or
2) EUR 30,000 – in the case of the provision of
services, sale or provision of intangible assets,
or
3) EUR 50,000 – in other cases.
In practice, only subparagraphs 2) and 3) have been
applied for years, since Article 6(7) of the CIT Act
was repealed in 1997.
As of 1 January 2017 the new wording of Article 9a
of the CIT Act has applied, giving rise to new limits,
taking into account the taxpayer’s revenues. As
such, the documentary obligation covered
taxpayers whose revenues or costs exceeded the
equivalent of EUR 2,000,000 in the year preceding
the tax year, who, in the tax year, carried out
transactions with related entities or recognised in
the accounting books other events, the terms of
which were agreed with related entities, having a
significant impact on the amount of their income or
loss.
Pursuant to the provisions that have been in force
since 1 January 2017, transactions or other events
of the same kind the total value of which exceeds
the equivalent of EUR 50,000 in the tax year are
considered transactions or other events that have a
significant impact on the taxpayer’s income or loss,
except that for taxpayers whose revenues in the
year preceding the tax year exceeded the
equivalent of:
1) EUR 2,000,000, but not more than the
equivalent of EUR 20,000,000 – transactions or
other events of the same kind, the value of
which exceeds in the tax year an amount
equivalent to EUR 50,000, increased by EUR
5,000 for each EUR 1,000,000 of revenues in
excess of EUR 2,000,000, are considered such
transactions or other events;
2) EUR 20,000,000, but not more than the
equivalent of EUR 100,000,000 – transactions or
other events of the same kind, the value of
which exceeds in the tax year an amount
equivalent to EUR 140,000, increased by EUR
45,000 for each EUR 10,000,000 of revenues in
excess of EUR 20,000,000, are considered such
transactions or other events;
3) EUR 100,000,000 – transactions or other events
of the same kind, the value of which in the tax
year exceeds the amount equivalent to EUR
500,000, are considered to be such transactions
or other events.
As of 1 January 2019, Article 9a of the CIT Act was
repealed and substituted by the entire Chapter 1a
of the CIT Act concerning transfer prices. New
provisions and definitions were introduced and both
the limits of transactions subject to transfer pricing
documentation and the scope of the documentation
itself were changed again.
The amendments mean that related entities are
required to prepare a local file of transfer pricing
for the financial year in order to demonstrate that
transfer prices have been agreed on such terms as
would be agreed by unrelated entities. A local file
of transfer pricing is to be prepared for each
controlled transaction of a homogeneous nature,
the value of which, less value added tax, exceeds
the following documentary thresholds in the
financial year, irrespective of the amount of
revenue or loss:
1) PLN 10,000,000 – in the case of commodity
transactions;
2) PLN 10,000,000 – in the case of financial
transactions;
3) PLN 2,000,000 – in the case of service
transactions;
4) PLN 2,000,000 – in the case of transactions
other than those specified in subparagraphs 1 to 3.
The above thresholds shall be determined
separately for each controlled transaction of a
homogeneous nature, whether a controlled
transaction is qualified as a commodity, financial,
service or another transaction, and separately for
the cost and revenue side.
In addition, according to the changes regarding the
content of the transfer pricing documentation, a
local file shall comprise:
- a description of the related entity;
- a description of the transaction, including
analysis of functions, risks and assets; - transfer pricing analysis, including:
- analysis of data of unrelated entities or
transactions concluded with unrelated
entities or between unrelated parties
recognised as comparable to the terms
agreed in controlled transactions,
hereinafter referred to as “comparative analysis”, or - analysis demonstrating compliance of the
terms under which a controlled transaction
was concluded with those that would be
agreed by unrelated entities, hereinafter
referred to as “compliance analysis” –
where comparative analysis is not
appropriate in the context of a given
transfer pricing method or where it is
reasonably impracticable;
- analysis of data of unrelated entities or
- financial information.
In addition, related entities which are consolidated
using the full or proportional method and which are
required to prepare a local file of transfer pricing,
shall attach a master file thereto if they belong to a
group of related entities:
1) for which consolidated financial statements are
prepared;
2) whose consolidated revenue exceeded PLN
200,000,000 or its equivalent in the previous
financial year.
Under the new regulations, a master file shall
comprise:
a) a description of this group;
b) a description of significant intangible assets of
this group;
c) a description of significant financial transactions
of this group;
d) financial and tax information of this group.
MILLER CANFIELD
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
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00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Skarbowców 23a
53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary of
certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the basis of any
decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases.
The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant legislation or other legal
development to the particular facts can be verified.