Last updated: 05.02.2025
How do Transfer Pricing Regulations apply in Poland?
The Polish CIT Law contains transfer pricing regulations. Such regulations authorise the tax authorities to assess the income on the transaction between related parties if the tax authorities consider it as being not at arm’s length principle.
Additionally, Polish taxpayers are required to prepare transfer pricing documentation for:
- Transactions with related parties, if the total value of the same transaction exceeds:
- PLN 10,000,000 – for commodities or financial transactions.
- PLN 2,000,000 – for services or other types of transactions.
- Transactions with entities from tax havens, as listed in the Regulations of the Minister of Finance, when the transaction involves costs for the Polish taxpayer and exceeds:
- PLN 2,500,000 – for financial transactions.
- PLN 500,000 – for non-financial transactions.
Who qualifies as a Related Party under Polish Transfer Pricing Rules?
The Polish definition of related parties is broader than in many other jurisdictions, covering not only capital and personal relations but also:
- The ability to influence key business decisions, even without formal ownership.
- Artificial ownership structures and apparent disruption of the chain of links, although these terms are not clearly defined in Polish international tax laws.
Exemptions from Transfer Pricing Documentation Obligations
In some cases, transactions between the Polish entities are out of the scope of the transfer pricing documentation obligation. However, several conditions must be fulfilled. One of the conditions is no tax losses by the parties of the transaction.
For controlled transactions exempted from the obligation to prepare local transfer pricing documentation, taxpayers are still required to report transfer pricing information (TP-R), but in a simplified scope.
Benchmarking Study and Safe Harbour Provisions
A benchmarking study is a mandatory component of the local file in Polish transfer pricing documentation. This study ensures that the prices charged in intercompany transactions align with comparable transactions conducted by unrelated parties in the market value range.
Polish transfer pricing regulations provide safe harbour exemptions for:
- Loans – where a fixed interest rate can be applied to simplify compliance.
- Low value-added services – allowing standardized pricing transactions without requiring a benchmarking study.
To benefit from safe harbours, companies must meet detailed conditions specified in the CIT Act, ensuring compliance with Polish pricing rules.
TP-R Reporting Requirements and Compliance Obligations
In addition to preparing transfer pricing documentation, Polish taxpayers are required to complete and submit a TP-R form, which provides detailed information about intercompany transactions conducted with related parties.
This form is a key component of transfer pricing regulations, ensuring compliance with the arm’s length principle and transparency in cross-border transactions.
The TP-R form must include:
- A written statement confirming that the required transfer pricing documentation has been prepared for the given tax year and that all prices charged in intercompany transactions adhere to market price standards.
- Comprehensive details about the taxpayer and all controlled and uncontrolled transactions subject to pricing regulations.
- Information on restructuring activities, including the impact on intangible assets, goods and services, and tax advantages gained through restructuring.
- Details on limited and general partnerships, such as the total value of contributions made by partners within a given tax year.
- Joint venture agreements and other contractual arrangements that could affect pricing rules and transfer pricing examinations.
As of 2023, only members of the board are authorized to sign the TP-R form, reinforcing corporate responsibility for transfer pricing compliance. The TP-R form has to be prepared within statutory deadline determined as the end of the eleventh month, after end of the given tax year.
Master File Requirements for Multinational Enterprises
For some of the Polish taxpayers, i.e., multinational corporations with consolidated group revenues exceeding PLN 200 million net, the preparation of a Master File is mandatory.
Unlike other transfer pricing documentation requirements, the Master File may be prepared in English, whereas all other reports must be in Polish. The deadline for Master File submission is 12 months after the end of given tax year.
Transfer Pricing Adjustments and Penalty Tax Rates
If tax authorities determine, through a transfer pricing audit, that a taxpayer’s company’s taxable income does not reflect comparable transactions at market price, they may impose transfer pricing adjustments.
The difference between the taxpayer-determined income and the adjusted taxable profits is subject to an additional tax rate:
- Standard 19% corporate tax rate, plus
- A 10% penalty tax rate applied to the reassessed taxable income.
In same circumstances, the penalty tax rate may increase:
- Doubled (20%) if:
- The basis for additional tax liability exceeds PLN 15 million.
- The taxpayer fails to submit transfer pricing documentation when requested by tax administrations.
- Tripled (30%) if both of the above conditions occur simultaneously.
FAQ – Transfer Pricing in Poland
How do transfer pricing rules apply in Poland?
Polish transfer pricing regulations follow the OECD transfer pricing guidelines, allowing tax authorities to assess related party transactions that do not meet the arm’s length principle.
Transfer pricing documentation is required for intercompany transactions exceeding PLN 10,000,000 for commodities or financial transactions and PLN 2,000,000 for services or other goods and services. Cross border transactions with tax havens exceeding PLN 2,500,000 (financial) or PLN 500,000 (non-financial) must also be documented.
What transactions require transfer pricing documentation?
Multinational corporations and other businesses must document the same transaction types with related parties when values exceed specified thresholds. Transfer pricing reports must include details on intercompany transactions, market price analysis, and residual profit split method applications.
Transactions involving intangible assets or comparable uncontrolled prices between unrelated parties also require proper documentation to prevent profit shifting.
What are the key TP-R reporting obligations?
The TP-R form includes financial statements, details on goods and services, and intercompany transaction involving cross border activities. It confirms that such documentation was prepared and that actual transactions adhered to transfer pricing method rules.
The form must also disclose restructuring activities, pricing regulations applied, and method analysis for determining the most reliable measure of market value. As of 2023, only members of the board can sign the TP-R form, ensuring compliance with transfer pricing examinations.
How do safe harbour rules impact transfer pricing?
Safe harbour provisions allow multinational enterprise groups to use specified methods for intercompany transactions, reducing the need for a detailed benchmarking study.
These apply to financial transactions, services provided, and pricing transactions related to low value-added services. Using best method analysis and reliable adjustments ensures compliance with tax purposes and prevents double taxation risks in high tax countries.
What are the penalty tax rates for non-compliance?
A transfer pricing audit may lead to transfer pricing adjustments, increasing a company’s taxable income. If tax administrations reassess taxable profits, the standard 19% corporate tax rate applies, plus a 10% penalty.
If the basis for additional tax liability exceeds PLN 15,000,000 or required documentation is not submitted, the penalty tax rate doubles to 20%. If both same circumstances occur, the penalty triples to 30%.
When is the Master File required?
Multinational corporations with consolidated group revenues exceeding PLN 200,000,000 must prepare a Master File. Unlike other documentation requirements, it may be prepared in English.
The report must include comparability analysis, method rule applications, and data on controlled and uncontrolled transactions. The deadline for submission is 12 months after the tax year ends.
How can companies minimize tax risks in transfer pricing?
To prevent tax avoidance, companies must set transfer prices using a particular method that aligns with the arm’s length principle.
A parent company and its subsidiaries must ensure that services rendered between related entities follow comparable circumstances to transactions with uncontrolled taxpayers. Proper documentation and compliance with Polish transfer pricing regulations help avoid disputes with tax authorities.