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Global transfer pricing guide

Transfer pricing - Poland

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Introduction to transfer pricing in Poland
Transfer pricing rules
  • The main Polish tax regulations in the area of transfer pricing can be found in the Personal Income Tax Act (PIT Act) and on Corporate Income Tax Act (CIT Act). From 1 January 2019, they are specified in chapter 4b of the PIT Act and chapter 1a of the CIT Act. The tax regulations in the area of transfer pricing also include a number of executive acts (decrees and announcements). Regulations connected to this area are also included, among others, in the Tax Ordinance and the Act on the exchange of tax information with other countries. Generally, Polish tax regulations in the area of transfer pricing are consistent with the OECD Guidelines.

  • The TP rules apply to PL taxpayers, including PL branches of overseas companies

  • The statutory deadline for preparing the transfer pricing documentation obligations is:

    • 9 months after the end of a fiscal year – in case of the Local file;

    • 12 months after the end of a fiscal year – in case of the Master file.
      The documentation does not have to be filed to the tax authorities on the deadline but representatives of the company need to formally declare its existence and confirm whether intragroup transactions are within arms-length principle.

The deadline for filing:

    • CbCR - is 12 months following the end of the reporting financial year of the group;
    • CbCR notification - is 3 months following the end of the reporting financial year of the group.
      In addition, the taxpayer has 7 days from receipt of a formal request to submit the transfer pricing documentation to the Polish tax authorities.

  • Yearly TP-R reports need to be filed to the tax authorities.
OECD guidance
  • Poland is the OECD member country
  • The OECD Transfer Pricing Guidelines are no part of the Polish law, however, they are used as an explanatory instrument.
  • Polish regulations are in line with the OECD Guidelines.
  • The tax authorities refer to the OECD Guidelines when applying transfer pricing principles.
Transfer pricing methods
  • Generally, the transfer pricing methods accepted by the tax authorities are based on the OECD Guidelines. These methods are:
    • CUP (Comparable Uncontrolled Price Method)
    • Resale Price Method
    • Cost Plus
    • TNMM (Transactional Net Margin Method)
    • Profit Split Method.
  • When selecting a price calculation method, taxpayer should make sure it is appropriate for the transaction. From 2019, there is no obligation to use traditional methods before profit-sharing methods.
  • The new regulations also allow for the use of another method, including a valuation technique, if none of the five above methods can be used.
Transfer pricing documentation
Preparation of transfer pricing documentation

Poland adopted the OECD three-tiered approach to transfer pricing documentation (with some local specifics), ie:

Local File
The obligation to prepare a Local file is imposed on taxpayers (natural persons, legal persons, organisational units without legal personality and permanent establishments) engaged in controlled transactions:

  • with its associated enterprises (according to the definition provided in the Polish tax law) or
  • involving payments made directly or indirectly to entities based in a country applying harmful tax competition, i.e. “tax haven” (the list of such countries is included in the Decree issued by the Polish Finance Minister), and

which exceed the thresholds specified below.

The local file, together with a transfer pricing analysis, should be prepared for each controlled transaction exceeding:

  • PLN 10 million (approx. EUR 2.5 million) for commodity or financial transactions;
  • PLN 2 million (approx. EUR 500 k) for service transactions and transactions other than those mentioned above.

In the case of controlled transactions conducted with entities based in a 'tax haven', the threshold for preparation of the Local file is PLN 100 k (approx. EUR 25 k, irrespective of the transaction type).

Taxpayers required to prepare Local Files are also required to conduct benchmarking studies for each transaction. The purpose of the Local File is to provide evidence of the arm’s length character of transactions made with related parties.

Local file should be prepared in Polish.

Master File
Starting from 2019, taxpayers are required to possess the Master file if both of the following criteria are met:

  • the taxpayer is obliged to prepare the local file; and
  • the consolidated revenues of the taxpayer’s capital group exceeded PLN 200 million (approx. EUR 50 million) in the previous fiscal year.

Master file may be prepared in English. However, in the case of a request from the tax authorities, the taxpayer is obliged to provide them with a Polish version within 30 days.

Country-by-Country Reporting (CbCR)
Members of the capital groups with consolidated revenues exceeding EUR 750 million or PLN 3 250 million (in the case that the consolidated revenues are presented in PLN) are, under certain circumstances, obliged to submit CbCR to the Polish tax authorities or notify them about the country where it is filed.

Additional reporting obligations
Taxpayers are obliged to prepare the Local file are also required to provide the Polish tax authorities with:

  • a statement on preparing the Local file (Transfer pricing statement), and
  • information on transfer pricing (TP-R).

The statement should confirm: (i) the fact that the transfer pricing local file is in place, and (ii) that documented transactions are arm’s length. Beginning from 2019, the Transfer pricing statement must be signed by the Management Board members which is subject to their personal responsibility.

The transfer pricing information (TP-R) requires providing the tax authorities with a wider range of data (eg taxpayer’s financial ratios, benchmarking study results) that allows the authorities to select enterprises for transfer pricing control in a more effective and efficient manner.

Master and local file

In general, the Polish transfer pricing documentation is in line with Chapter V of the OECD Guidelines (2017). However, some local specifics need to be included for the master file and local file.

The local file should include (presented separately for each transaction):

  • a description of the related parties engaged in the controlled transactions
  • a description of the controlled transactions, including the functional analysis
  • a transfer pricing analysis under which the taxpayer (depending on the circumstances) is obliged to prepare a benchmarking study or otherwise justify the arm’s-length nature of the transaction
  • financial data.

Master file, it should include the following information:

  • description of the group
  • description of the material intangible assets owned by the group
  • description of the material financial transactions carried out by the group
  • financial and tax information concerning the group.

The specific scope of the local and master file is presented in the ordinance issued by the Polish Ministry of Finance.

Some risk factors for challenge
  • Companies making losses over a number of years, in particular, 'low risk' entities
  • Sustained losses by local entities, but (overall) profits in the group
  • Companies paying large management fees or paying royalties or other charges for the use of the intellectual property.
  • Significant group reorganizations involving business or IP transfers overseas.
  • Transactions with tax havens or shelters.

Beginning from 2019, the penal tax rate of 50% on the amount of revalued income, imposed in the absence of transfer pricing documentation, has been replaced with new sanctions that directly penalise the use of non-arm’s length pricing in controlled transactions.

In accordance with the new provisions of the Tax Ordinance, the sanction for using non-arm’s length pricing in transactions with associated enterprises may vary from 10% to 30% of the amount of overstated loss or understated income, depending on the circumstances.

Note that regardless of the above, in the case that the transfer pricing documentation is: (i) not submitted within the statutory deadline, (ii) incomplete, or (iii) contains false information, individual sanctions might be imposed on individuals based on the Fiscal Penal Code (FPC).

The FPC did not include specific provisions on penalties for failing to meet the transfer pricing documentation obligations in Poland. Therefore, any potential penalties/sanctions would be imposed based on the general regulations.

Economic analysis and how to demonstrate an arm’s length result

The Polish tax authorities will expect to see that a search for potential internal comparables has taken place before defaulting to an external database search for comparables.

The Polish tax authorities generally accept the regional benchmarking studies, in particular, pan-European ones (assuming that the comparability criteria are met). The Polish tax authorities prefer local comparables (if available), in particular in the case that the benchmarking study is for a Polish entity only.

Beginning from 2019, Poland introduced safe harbour regulations in respect of:

  • low value-adding services
  • financial transactions (loans, bonds).

In both cases, if certain conditions are met, the Polish tax authorities do not verify the arm’s-length nature of the remuneration agreed in transactions between associated enterprises, and recognise the methodology adopted by the taxpayer as correct. Thus, the Local file does not have to include a benchmarking study. See also 'Related development' section.

Advance Pricing Agreements (APAs), dispute avoidance and resolution

APAs are available in Poland, including foreign business entities operating through a permanent establishment. The Head of National Revenue Administration in Poland may issue, on request, a decision on whether it finds a given method of determining the transfer price between related parties acceptable.

The Polish Tax Ordinance allows for the following types of APAs:

  • unilateral APA – for transactions between domestic entities or a domestic entity and a foreign entity, and
  • bilateral/multilateral APA – issued by the Head of National Revenue Administration after obtaining foreign tax authorities’ consent.

The APA decision is binding from the date of submitting the APA application to the Head of National Revenue Administration.

Under the law, the decision will be binding upon the tax authorities in the case of other tax procedures (such as tax audits and tax-legal proceedings).

Under the Polish Tax Ordinance, the filing fee for an APA application is 1% of the transaction value, with the following thresholds:

  • domestic unilateral agreement: PLN 5,000–50,000;
  • foreign unilateral agreement: PLN 20,000–100,000;
  • bilateral/multilateral agreement: PLN 50,000–200,000.

The APA may be issued for a period not longer than five years with the possible extension for the following five-year periods.

In addition, the Polish Minister of Finance expects to introduce, already in 2019, a simplified APA procedure for low value-adding services and certain licence fees, together with changes to the currently binding APA provisions.


The Polish regulations indicate several cases where the taxpayer is exempted from the obligation to prepare the local file. Those are the following:

  • conclusion of a transaction between Polish enterprises (only) that did not demonstrate a tax loss for the documented period and did not take advantage of selected tax exemptions (eg in connection with carrying out their operations within a Special Economic Zone)
  • conclusion of a transaction subject to an advance pricing agreement (APA)
  • conclusion of a transaction between companies from a tax capital group
  • determination of the transaction price in an unlimited tender procedure based on the public procurement law.
Related developments
Safe harbours

From 1st January 2019, the so-called Safe Harbour institutions is introduced into Polish transfer pricing regulations. Safe harbour means that some of the transactions executed by the taxpayer will not be subject to estimation, as long as they are executed under the conditions indicated by the legislator.

These transactions are:

  • Low added-value services (there is a precise catalog of services that falls into this category)
  • Loan (credit and bond) agreements.

Safe harbour for low value-added services could be applied where the cost mark-up for these services has been determined on the basis of the cost plus or TNMM method and is equal to:

  • no more than 5% of the costs - in case of purchase of services;
  • not less than 5% of the costs - for the provision of services.

Moreover, the service provider does not have its place of residence, registered office, or management in a tax haven and the recipient of the service should have a service price calculation including the type and amount of costs included in the manner of application and justification for the selection of allocation keys for all related parties who use the services.

The condition for the application of the safe harbour for loans, on the other hand, is that the interest rate of the loan is determined on the basis of the type of base interest rate and margin set out in the Minister of Finance notice. In addition, the loan agreement must not contain any provision for remuneration other than interest to be paid to the lender and the loan must not be concluded for a period exceeding five years.

It should be remembered that in order to benefit from the protection offered by the safe harbour for loan transactions, the total level of liabilities or receivables of the company with related parties cannot exceed PLN 20,000,000 or the equivalent of that amount, and the lender may not have a residence, registered office or management in a tax haven.

Transfer pricing adjustments

At the beginning of 2019, the Corporate Income Tax Act has been amended to include provisions regarding transfer pricing adjustments. These provisions allow such adjustments to be recognised in the year to which they relate, even if they are ‘minus’ adjustments, but only if all the requirements set out in the Corporate Income Tax Act are met.

According to Article 11e of the CIT Act, a taxpayer may adjust a transfer price by amending the amount of its revenues or tax-deductible costs if the following conditions are met jointly:

  • the controlled transactions concluded by the taxable person in a fiscal year were on the terms that would have been agreed between independent entities
  • significant circumstances influencing the terms agreed upon during the fiscal year changed or the actual costs incurred or revenues earned being the basis for calculating the transfer price become known and the transfer prices must be adjusted to ensure their compliance with market terms
  • upon adjusting the transfer prices, the taxable person holds a statement from the associated enterprise confirming that the associated enterprise adjusted the transfer prices for the same amount as the taxable person
  • the associated enterprise referred to in the point above has its place of residence, registered office or management board in Poland or in a country or a territory with which Poland has concluded a tax treaty and there is a legal basis for the exchange of tax information with that country
  • the taxable person confirms adjusting the transfer prices in its annual tax return for the fiscal year to which the adjustment refers.
Recharacterisations and disregard of transaction

The legislation in force since 1 January 2019 has introduced new mechanisms available to tax authorities when estimating revenue. Possibilities are:

  • Recharacterisation of a transaction
  • Disregarding of a transaction.

Recharacterisation and disregarding of the transaction may be applied under the opinion of the tax authorities, if in comparable circumstances, unrelated parties guided by economic rationality would not have entered into the controlled transaction concerned.

In assessing these facts, the tax authorities shall take into consideration the conditions that have been agreed between related parties and the fact that the conditions agreed between them do not allow the transfer price to be set at a level that would have been agreed by economically unrelated parties based on considerations of realistically available options.

The effect of disregarding of a transaction by the tax authorities could lead to assessing the income or loss of the taxpayer without taking into account the controlled transaction, while the effect of recharacterisation could lead to assessing the income or loss of the taxpayer with respect to the relevant transaction (ie the one that would be made by unrelated entities).

Tax authorities cannot use the above tools just because of:

  • difficulty in verifying the transfer price
  • lack of comparable transactions between unrelated parties in comparable circumstances.

Legislation providing relief from the effects of the coronavirus (COVID-19) pandemic includes measures to postpone the deadlines for preparation of transfer pricing documentation and for filing a transfer pricing information return (filed on forms TPR-C and TPR-P).

The deadline for submitting a statement that transfer pricing documentation has been prepared and for providing transfer pricing information (forms TPR-C and TPR-P) has been extended as follows:

  • 31 December 2020 - for taxpayers for whom the deadline was scheduled to expire between 31 March 2020 and 30 September 2020
  • By three months - for taxpayers for whom the deadline was scheduled to expire between 1 October 2020 and 31 January 2021

The legislation also postpones for an additional three months, the deadline for preparing a Master Accordingly, for taxpayers whose tax year ended on 31 December 2019:

  • The deadline for preparing the Local file, submitting the statement of transfer pricing documentation, and filing the TP-R information return is 31 December 2020.
  • The deadline for preparing the Master file to the Local file is 31 March 2021.

For further information on transfer pricing in Poland please contact:

Anatol Skitek.png

Anatol Skitek
T +48 661 538 546

Marcin Żmuda.png

Marcin Żmuda
T +48 607 665 734