PolandPoland

Legal ReferenceArticle 11c of the Corporate Income Tax Act (CIT act) Article 23o of the Personal Income Tax Act (PIT act)

The OECD Transfer Pricing Guidelines are not part of the Polish law. However, based on the court rulings, they are treated as good practice and point of reference that assist in interpretation of tax regulations regarding transfer pricing.

Legal ReferenceArticle 11a para. 1 point 4 and para. 2 of the CIT act Article 23m para. 1 point 4 and para. 2 of the PIT act

In general, Polish TP regulations define related parties as those having a direct or indirect relationship that involves exerting significant influence. This can generally take any of the following forms: − through ownership, management or control relationships (25% threshold of capital, voting rights, shares, or rights to participate in profits); − through the actual ability of an individual to influence key economic decisions; − through family connections. Please refer to the current PIT and CIT provisions for further details.

Legal ReferenceArticle 11d para. 1, 2 of the CIT act Article 23p para. 1, 2 of the PIT act

Where it is not possible to apply the five standard methods, other method shall be applied, including the valuation technique, most appropriate in given circumstances.

• CUP (provided)
• Resale Price (provided)
• Cost Plus (provided)
• TNMM (provided)
• Profit Split (provided)
• Other (provided)

Legal ReferenceArticle 11d paragraph 3 of the CIT act Article 23p paragraph 3 of the PIT act

While selecting the most appropriate method in given circumstances, the respective analysis should cover: conditions which have been agreed or imposed between related entities, the availability of the information necessary for the proper application of the method, as well as the specific criteria for application thereof.

• Hierarchy of methods (not selected)
• Most appropriate method (selected)
• Other (not selected)

Legal ReferenceRegulation of the Minister of Finance on TP (CIT) Regulation of the Minister of Finance on TP (PIT)

Comparability analysis is regulated in the Regulations of the Minister of Finance on transfer pricing (CIT/PIT).

There is no official preference for domestic comparables in the law. Choice of market (local, regional or global) is based on comparability factor (economic circumstances). Preference to use local data stems from the general guidance on comparability, as local data is generally considered to be more comparable than regional or global data provided that other comparability factors are met. Typically, regional or European benchmarks would be used when there is not sufficient reliable data based on domestic comparables.

Legal ReferenceParagraph 2 point 3 letter c of the Regulation of the Minister of Finance on TP documentation (CIT) Paragraph 2 point 3 letter c of the Regulation of the Minister of Finance on TP documentation (PIT)

Polish TP regulations allow using a range and statistical measures. In general, Local File has to include detailed comparability analysis and description of benchmarking study, including indication what is the arm’s length point or range and describe statistical measures, if they were used.

Legal ReferenceRegulation of the Minister of Finance on TP (CIT) Regulation of the Minister of Finance on TP (PIT)

Comparability adjustments are performed, if they are necessary to obtain a higher degree of comparability of comparable data to the controlled transaction. This rule is included in Regulations of the Minister of Finance on transfer pricing (CIT – paragraph 4 point 8; PIT – paragraph 4 point 8).

Polish domestic legislation does contain specific guidance to the pricing of controlled transactions involving intangibles i.e. describe specifically IP comparability criteria, DEMPE analysis, HTVI, procedure of IP analysis but also tend to rely heavily on the OECD TPG.

Legal ReferenceRegulation of the Minister of Finance on TP (CIT) Regulation of the Minister of Finance on TP (PIT)

Poland has adopted the OECD HTVI approach. HTVI approach is regulated in Regulations of the Minister of Finance on transfer pricing (CIT – paragraph 8 in connection with paragraph 2 point 2 and paragraph 3 point 3; PIT – paragraph 8 in connection with paragraph 2 point 2 and paragraph 3 point 3).

Legal ReferenceRegulation of the Minister of Finance on TP (CIT) Regulation of the Minister of Finance on TP (PIT)

The HTVI approach is applicable if both of the following conditions are met: − the intangible fulfils the definition of HTVI indicated in paragraph 2 point 2 of Regulations of the Minister of Finance on transfer pricing – this definition is consistent with the definition contained in p. 6.189 of the OECD TPG, − the discrepancies between the forecast and the actual transfer price of HTVI amount to at least 20% of the forecast transfer price. When the above conditions are met, the tax authorities can take into account in assessing the taxpayers income (loss) in terms of the transaction involving HTVI, the circumstances, including comparable data, that could have not been known to its parties on the day of its conclusion and which, if had been known, could have led to a higher or lower transfer price established between related parties. However, the above approach is limited to the circumstances listed in paragraph 3 point 3 of the Regulations of the Minister of Finance on transfer pricing which means that the tax authorities may apply the approach only if: − unrelated entities in comparable circumstances would: • recalculate the initially determined price based on the price adjustment clause contained in the terms of the agreement, • renegotiate the originally agreed conditions, therein the pricing, • establish contingent payments for the settlement of a comparable transaction, − the taxpayer, as of the date of the transaction, had not taken into account all reasonably foreseeable circumstances, that might affect the level of the transfer price of HTVI.

Transfer pricing analysis of HTVI is similar to the one established in Chapter I and VI OECD TPG. The regulations on accurate delineation of the controlled transaction and on comparability analysis of intangibles implemented in Poland are generally consistent with the OECD Transfer Pricing Guidelines.

Legal ReferenceTax Ordinance Act of 29 August 1997

There is no specific statute of limitation for transactions involving HTVI – the general statute of limitation applies. According to art. 70 paragraph 1 of the Tax Ordinance Act the tax liability expires after 5 years, counting from the end of the calendar year in which the tax payment deadline has expired.

Legal ReferenceRegulation of the Minister of Finance on TP (CIT) Regulation of the Minister of Finance on TP (PIT)

The APA regulations do not provide any restrictions regarding transactions involving HTVI.

The Polish Tax Administration conducts trainings, studies and workshops for tax auditors concerning taxation of MNEs activities, especially transfer pricing. Ensuring that hindsight is not applied is one of the points that is included in those trainings and workshops.

Adjustments are possible if there is payment spread over time (in open years) or where there is price adjustment clause in the agreement.

General rules regarding corresponding adjustments are applied.

There is no possibility to make several adjustments for one single HTVI transaction for given year. In this regard tax adjustments made on HTVI transactions do not differ from tax adjustment made with respect to other types of transactions. The following general rules apply: According to art. 11c of CIT Act (respectively art. 23o of PIT Act) (the arm’s length principle), the tax authority determines the taxpayer’s income (loss) in case when the conditions of transaction do not fulfil the arm’s length principle. When the tax authority once determined the arm’s length conditions of the transaction, there is no legal base to re-determine these conditions. Moreover, art. 282a § 1 of the Tax Ordinance Act states that in the matters resolved by the final decision of the tax authority, the tax inspection cannot be initiated again.

Polish domestic legislation does not include specific guidance or special measures regarding intra-group services transactions and tend to rely on the OECD TPG.

Legal ReferenceArticle 11f of the CIT Act Article 23r of the PIT Act

Polish transfer pricing rules include safe harbour for low value-adding services. To qualify for the safe harbour on low value-adding services, the transaction must meet certain conditions: − a mark-up on costs is not higher than 5%, in the case that the taxpayer purchases the services; − a mark-up on costs is not lower than 5%, in the case that the taxpayer renders the services; − the service provider is not a subject whose place of residence, seat, or management office is in the territory of or in a country applying harmful tax competition; − the service recipient is in possession of the calculation covering the following information: • the type and the amount of the costs included in the calculation, • the manner of application and the grounds for the choice of the allocation keys for all related entities using the services; • description of the transaction, including analysis of functions, risks and assets.

Legal ReferenceArticle 15c of CIT Act

Taxpayers who are subject to corporate income tax are covered by rules that specify the exclusion of debt financing costs from deductible expenses.

Poland does not have separate regulations governing CCA issues. However, the wide scope of the definition of a controlled transaction adopted in the Polish transfer pricing regulations covers cost sharing agreements (CCA).

Legal ReferenceArticle 11k, 11o, 11p, 11t of CIT Act Article 23w, 23za, 23zb, 23zf of PIT Act Article 83, 84, 86 of Exchange of tax information with other countries Act

• Master file consistent with Annex I to Chapter V of the TPG (selected)
• Local file consistent with Annex II to Chapter V of the TPG (selected)
• Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
• Specific transfer pricing returns (separate or annexed to the tax return) (selected)

Legal ReferenceArticle 11k, 11o, 11p, 11t of CIT Act Article 23w, 23za, 23zb, 23zf of PIT Act Article 83 para.1, art. 84 para. 1 and 2, art. 86 paragraph 1 of Exchange of tax information with other countries Act

Master File: Prepared if entity is part of MNE group with consolidated financial statement, obliged to prepare Local File, and consolidated revenues exceed PLN 200 Million. Due by end of 12th month after financial year. If in English, tax authority may request Polish version within 30 days. Local File: Prepared for controlled transactions exceeding thresholds (PLN 10M for commodity/financial, PLN 2M for services/other). Due by end of 10th month after financial year. CbCR: Prepared if consolidated revenues exceed PLN 3.25 Billion (or EUR 750 Million). Report due within 12 months, notification (CbC-P) within 3 months from end of financial year. TPR Form: Filed by end of 11th month after financial year.

Legal ReferenceArticle 90, 91 of Exchange of tax information with other countries Act Article 56c, 80e of Penal Fiscal Code

Polish regulations provide for fines for failing to meet transfer pricing compliance obligations, including failure to prepare Local File, attach Master File, submit TPR Form, or providing unreliable/late documentation. CbCR non-compliance also results in financial penalties.

Legal ReferenceArticle 11n, 11o of CIT Act Article 23z, 23za of PIT Act

Polish regulations provide for exemption from Local File obligation in case of certain transactions. Detailed list of exemptions is included in Article 11n of the CIT Act or Article 23z of the PIT Act.

Legal ReferenceArt. 83-107 of DRM Act

• Rulings (selected)

Legal ReferenceArt. 14a, 14b, 20s-20zr, 20zs-20zze of Tax Ordinance Act of 29 August 1997 Poland’s MAP Profile

Information on APA and MAP is provided in MAP profile.

• Enhanced engagement or cooperative compliance programmes (selected)
• Advance Pricing Agreements (APA) (selected)
• Unilateral APAs (selected)
• Bilateral APAs (selected)
• Multilateral APAs (selected)
• International Compliance Assurance Programme (ICAP) (selected)
• Mutual Agreement Procedures (selected)
• Other (please specify): investment agreement (Article 20zs § 1 in connection with Article 20zt point 1of the Tax Ordinance Act) or tax agreement referred to in Article 20zb point 2 of the Tax Ordinance Act (selected)

Legal ReferenceArticle 11f, Art. 11g of CIT Act Article 23r, Art. 23s of PIT Act Announcement of the Minister of Finance of 27 December 2024 on the types of the base interest rate and margin for the purposes of transfer pricing (CIT, PIT)

Polish transfer pricing rules recognise safe harbour regulations of financial transactions (loans) and low value-adding services. For low value-adding services, conditions include a 5% mark-up and specific documentation. For loans, conditions include interest rate based on MoF announcement, no other fees, duration not longer than 5 years, and a PLN 20 Million threshold.

Legal ReferenceArt. 64 of DRM Tax Act

Polish regulations allow unilateral adjustments to be made. The Minister of Finance may adjust the income of domestic related entity if the provisions of international agreements provide for such an adjustment. The adjustment shall be made at the request of the domestic related party.

Legal ReferenceArt. 11e of CIT Act Art. 23q of PIT Act

A taxpayer is allowed to make an adjustment of transfer pricing by changing the amount of the revenues earned, or tax deductible costs incurred, provided that specific conditions are fulfilled, including arm's length determination during the year, change of material circumstances, and possession of a declaration from the related entity.

Almost all DTA include pre-2010 version of Article 7. Only one DTA includes post-2010 version of Article 7.

• Article 7 as it read before 2010. (selected)
• Article 7 as it reads after 2010. (selected)

AOA is applied to the extent that the approach is not contradictory to the Article 7 included in the respective DTA. Therefore, Poland generally uses approach described in the 2008 Report on the Attribution of Profits to Permanent Establishments.

No specific guidance is provided in the Polish legislation. However, the Polish provisions on transfer pricing consider the company and its permanent establishment to be related entities (approach similar to AOA).