Entities obliged to prepare group transfer pricing documentation (2023)
Article 11p of the CIT Act
The threshold for Master File obligations has been abolished. From the new tax year, related entities which are obliged to prepare local transfer pricing documentation, whose financial statements are consolidated using the full or proportional method, are obliged to prepare the group transfer pricing documentation (Master File), prepared for the financial year, by the end of the twelfth month after the end of the tax year.
Value of the transaction (2023)
Article 11l (2a) of the CIT Act
If VAT is not neutral for the taxpayer, the amount of VAT resulting from the controlled transaction will be included in the value of the transaction related to the documentation threshold.
The thresholds:
- PLN 10 000 000 – in the case of a commodity transaction;
- PLN 10 000 000 – in the case of a financial transaction;
- PLN 2 000 000 – in the case of a service transaction;
- PLN 2 000 000 – in the case of a transaction other than those specified in subparagraphs (1) to (3).
It is recommend to conduct ongoing analyses of transactions with related entities during 2022.
Benchmarking/compatibility analysis (2023)
Article 11q (3a) of the CIT Act
A number of exemptions from the obligation to prepare TP analyzes were introduced in the case of transactions:
- covered by the safe harbor mechanism for low-value services;
- concluded by affiliated entities that are micro or small entrepreneurs;
- and some transactions with entities from tax havens.
In the case of a contract of a company that is not a legal person, joint venture or other such agreement, the TP analysis is to include mainly established rules regarding the rights of partners, and parties to the contract to participate in profit/loss. It is recommended to look for the possibility of an exemption from the obligation to prepare additional analyses.
It is advised to pay attention to the following mechanisms: safe harbor for low value-added services; and safe harbor for financial transactions.
Safe harbor for low value-added services
The following conditions must be met:
- the markup on the costs of services is:
a. not more than 5% of the costs – in the case of service acquisition;
b. not less than 5% of the costs – in the case of service provision; - using the cost-plus method or the transactional net margin method;
- the service provider is not an entity residing in a tax haven;
- The service recipient has a calculation including the following information:
c. Type and amount of costs included in the calculation;
d. The method of application and the rationale for the selection of allocation keys for all related entities using the services;
e. A description of the transaction, including an analysis of functions, risks, and assets.
Safe harbor for low value-added services applies to the services listed in Annex 6 to the CIT Act, which meets all of the following conditions:
- they are services supporting the economic activity of the service recipient;
- they do not constitute the main object of the activity of the group of affiliated entities;
- the value of those services provided by the service provider to non-affiliated entities does not exceed 2% of the value of those services provided to affiliated and non-affiliated entities;
- they are not the object of further resale by the service recipient, excluding re-invoicing.
Safe harbor for financial transactions
The following conditions must be met:
- the annual interest rate on the loan at the date of the conclusion of the agreement is set based on the type of base interest rate and the margin specified in the announcement of the Minister of Finance from 21 December 2021 on the type of base interest rate and margin for transfer pricing purposes;
- no commission or bonus under the loan;
- the loan was granted for a period not longer than 5 years;
- during the tax year, the total level of liabilities or receivables of the affiliated entity arising from the principal amount of loans with affiliated entities, calculated separately for granted and taken loans, does not exceed PLN 20 000 000 or the equivalent of this amount;
5. the lender is not an entity having a registered office in a territory or in a state applying harmful tax competition.
It is recommended to conduct an ongoing safe harbor analysis in 2022, also in terms of possible MDR reporting.
Deadline for preparing local transfer pricing documentation (2023)
Article 11k (1) of the CIT Act
Change from 9 to 10 months after the end of the tax year. The change will have real effects on taxpayers in 2023, when documentation for the tax year 2022 will be prepared. However, it is possible that the legislator will extend the deadline for preparing the documentation in 2022.
Deadline for submission of TPR form (2023)
Article 11t (1) item 2 of the CIT Act
Change from the current 9 months to 10 months after the end of the tax year. The change will have real effects on taxpayers in 2023 when the TPR form for the tax year 2022 will be prepared.
Deadline for preparing group transfer pricing documentation (2023)
Article 11p (1) of the CIT Act
The deadline is 12 months after the end of the tax year (no change).
The deadline for submitting transfer pricing documentation to the tax authorities in the case of tax audit (2023)
Article 11s (1) of the CIT Act
Change from the 7 days to 14 days.
TP statement (2023)
Article 11t (2) item 7 of the CIT Act
There is no obligation to submit a separate statement on the preparation of transfer pricing documentation and certification of the arm’s length nature of transactions with related entities. The content of the declaration will be included in the TPR form. The change will have real effects on taxpayers in 2023, when the TPR form for the tax year 2022 will be prepared.
Submitting the TPR form (2023)
Article 11t (1) item 2 of the CIT Act
The “Polish Deal” introduces the obligation to submit the TPR form to the tax offices competent for submitting the annual income tax declaration. Currently, the form is submitted to the Head of KAS. The change will have real effects on taxpayers in 2023, when the TPR form for tax year 2022 will be prepared.
TPR form for entities that are not a legal person (2023)
Article 11t (1a) item (1-3) of the CIT Act
Non-legal entities are also obliged to submit the TPR form to the head of the tax office competent for the registered office or place of business of the entity. So far, the TPR form has been submitted by a designated partner to the Head of KAS. The change will have real effects on taxpayers in 2023, when the TPR form for the tax year 2022 will be prepared.
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