Poland is an important business partner for the Czech Republic. A lot of our clients are acting here and solving setting transfer prices with a Polish related party. For those of you who are solving a similar problem, it will be for sure interesting to know which legislative changes in the sphere of transfer prices are being prepared in Poland.

Changes in persons who have to prepare duly a documentation on transfer prices

The proposed change consists in the fact that micro tax payers, that´s those having revenues up to the amount of 2 mil. EUR, will no more be obliged to prepare a transfer price documentation. All other companies generating revenues (or having costs) higher than 2 mil. EUR will have to prepare a documentation on transfer prices for all transactions with allied (related) companies for the current as well as next taxable period, regardless of the value of transactions with their related parties.

Three-level documentation on transfer prices

The proposal of changes establishes a three-level documentation on transfer prices (reaction to BEPS at OECD) consisting of:

Group documentation (Master file) – here information for the whole group will be stated – for the case of entities with revenues (or costs) exceeding 20 mil. EUR.

Local documentation (Local file) – here information on transactions between related parties (regardless of their value) will be stated. 

Group reporting (Country-by-country reporting) – in a table form it will be necessary to present aggregate key information (for example revenues, paid tax) for each group company – companies being parent companies and consolidating entities will be reporting, and at the same time, provided that consolidated revenues of the group exceed 750 mil. EUR for the previous taxable period.

Compulsory parts of the documentation on transfer prices

According to the proposed changes the local documentation will be divided into three parts:

Description of a tax payer – it has to include (i) description of economically important functions or assets or risks between related parties having influence on the profit and loss report, (ii) competitive surrounding.

Description of transactions realized between the tax payer and related parties including (i) description of compliance of terms of the transaction between related parties with those being concluded with independent entities, (ii) algorithm of posting and accounting the transaction, (iii) analysis of independent entities.

Financial information of the tax payer completed by approved reports.