Poland increased transfer pricing documentation requirements
The new law provides for significant changes to the existing Polish transfer pricing documentation requirements as from the year 2016. Generally more information needs to be provided and disclosed to the Polish tax authorities.
According to the new regulation, taxpayers will be obliged to prepare much more extensive TP documentation (compared to the current requirements) after exceeding certain statutory thresholds, conduct benchmarking studies, and submit additional returns summarizing their related-party transactions.
The thresholds will be determined for each tax payer separately and will start from EUR 50,000. If the taxpayer for instance exceeds EUR 10 million in turnover or expenses in the preceding year, the tax payer is required to prepare a benchmark and local documentation, including:
- A local benchmark study including Polish comparable companies (preferably) to be prepared for each separate transaction
- Actual financial data to support the at arm’s length nature of transactions
- If no local Polish comparables can be found, the tax payer needs to proof that the transactions are at arm’s length
Taxpayers with more than EUR 20 million of turnover and expenses need to provide even more information. These companies need to provide group documentation describing the transfer pricing policy, characteristics and documentation of the entire group.
Poland is one of the front runners in increasing transfer pricing requirements. It will be increasingly difficult to prepare so-called Pan European Transfer Pricing polish to substantiate Polish related party transactions. This will increase local compliance costs for many companies having operations in Poland.
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