Tax customs & excise

Transfer Pricing / Poland – Transactions with Tax Havens

Polish Transfer pricing obligations – transactions with tax havens

Polish Law regarding transfer pricing i.e. article 11o (1b) of the CIT Act in Poland states that the obligation to prepare local transfer pricing documentation rests with taxpayers:

  1. who performs transactions other than controlled with the entity whose residence, seat or management board is located in the territory of a country applying harmful tax competition (e.g. Hong Kong), if the value of this transaction for the tax year exceeds PLN 100,000.
  2. who performs a controlled transaction or transaction other than controlled, if the beneficial owner has a place of residence, registered office or management board is located at the territory or in a country applying harmful tax competition (e.g. Hong Kong) and the value of this transaction for the fiscal year exceeds PLN 500,000.

Summary – when you need to prepare TP documentation

Transactions other than controlled with entity of tax haven (management, seat or residence) Obligation to prepare TP local file if transaction exceeds PLN 100,000 / year
Controlled transaction with entity who’s beneficial owner is from tax haven (management, seat or residence) Obligation to prepare TP local file if transaction exceeds PLN 500,000 / year

The concept of the beneficial owner in Transfer Pricing (Poland)

Polish transfer pricing regulation i.e. art. 11o (1b) of the CIT explains that the beneficial owner has his place of residence, seat or management board in the territory of a country applying harmful tax competition, if the other party to the transaction makes settlements with an entity having its registered office or management board at territory or country applying harmful tax competition.  When establishing these circumstances, the taxpayer or the company are obliged to exercise due diligence.

Polish list of tax havens – Hong Kong, Monaco and Andorra

List is set out in an ordinance of the Minister of Finance, and this list includes countries such as Andorra, Monaco and Hong Kong.

Author team leader DKP Legal Michał Dudkowiak
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