In this post, we discuss the key aspects of transfer pricing regulations in the context of domestic transactions, with particular emphasis on the changes resulting from the proposed amendment to the PIT and CIT Acts (draft UDER107) and the President’s draft bill aimed at tightening the control system.
Who is subject to transfer pricing obligations?
Transfer pricing regulations cover controlled transactions of a homogeneous nature entered into between related parties, regardless of whether they are domestic or cross-border in nature. Related parties within the meaning of Article 11a(1)(4) of the CIT Act are entities where one exercises significant influence over the other. Significant influence means, in particular, the direct or indirect holding of at least 25% of the capital, voting rights or share in profits, as well as the actual ability of a natural person to influence the key business decisions of the entity in question. The links may also be of a family nature (marriage, kinship or affinity up to the second degree).
In practice, the obligation to prepare transfer pricing documentation arises once the statutory thresholds for the value of a single transaction in a given tax year are exceeded. The applicable documentation thresholds (net amounts) are as follows:
- PLN 10,000,000 — goods and financial transactions (Section 11k(2)(1) of the CIT Act),
- PLN 2,000,000 — service and other transactions (Article 11k(2)(2) of the CIT Act).
For transactions with entities from countries engaging in harmful tax competition, the thresholds are significantly lower, amounting to PLN 2,500,000 (financial transactions) and PLN 500,000 (other transactions) respectively.
Domestic exemption
A key simplification for taxpayers conducting transactions exclusively with domestic related entities is the so-called domestic exemption, regulated in Article 11n(1) of the CIT Act. Under this provision, the obligation to prepare local transfer pricing documentation does not apply to controlled transactions entered into exclusively by related entities having their place of residence, registered office or place of management within the territory of the Republic of Poland, provided that each of these entities jointly meets the following conditions:
- it does not benefit from a subjective exemption under Article 6 of the CIT Act (e.g. budgetary units, state special-purpose funds),
- they do not benefit from the exemption for income from zone activities (Article 17(1)(34) and (34a) of the CIT Act — SEZ and PSI),
- it has not incurred a tax loss from the source of revenue to which the controlled transaction in question is attributed.
The interpretation of the condition relating to tax losses is particularly significant. In accordance with the current line of rulings by the Director of the National Tax Information Service (KIS), confirmed, inter alia, in the individual interpretation of 13 May 2025 (ref. 0111-KDIB1-3.4010.205.2025.1.AN), this condition applies exclusively to a loss from the source of income to which the transaction in question is attributed. A loss from a second source of income (e.g. from capital gains, where the transaction relates to operating activities) does not preclude the possibility of claiming the exemption.
The domestic exemption relieves the obligation to prepare a local transfer pricing documentation (local file), but does not relieve the obligation to submit TPR information. Entities benefiting from the exemption under Article 11n(1) of the CIT Act continue to submit the TPR form, albeit in a limited scope, i.e. without the data specified in Article 11t(2)(3) and (5)–(7) of the CIT Act.
Documentation obligations and deadlines
For taxpayers with a tax year coinciding with the calendar year, the key deadlines for 2025 are as follows:
- 31 October 2026 – preparation of the local transfer pricing documentation (local file),
- 30 November 2026 – submission of TPR information (form TPR-C or TPR-P) to the competent head of the tax office,
- 31 December 2026 – preparation of the master file – applies to entities belonging to capital groups with consolidated revenues exceeding PLN 200 million.
It is worth noting that templates for the electronic TPR-C(6) and TPR-P(6) documents, applicable for reporting for the year 2025, have been published on the Ministry of Finance’s Public Information Bulletin (BIP) website.
Planned changes – draft UDER107
In January 2026, a draft bill amending the PIT Act, the CIT Act and the Fiscal Penal Code (No. UDER107) appeared on the Council of Ministers’ legislative agenda. This draft, published on the Government Legislation Centre’s website on 31 March 2026, provides for a number of changes relevant to domestic transactions:
Simplifications in TPR reporting
The draft proposes moving away from specific rules for signing the TPR form in favour of the general rules of the Tax Ordinance, which means that a TPR may be signed by a proxy. Micro and small enterprises are to be exempted from the obligation to disclose financial indicators in the TPR information.
Inclusion of the TP statement in local documentation
Until now, local transfer pricing documentation and the declaration of its preparation constituted two separate obligations, although in practice they were inextricably linked. The proposed changes envisage combining both elements – the declaration of the arm’s length nature of transfer prices will become an integral part of the local documentation. The consequence will be an earlier deadline for submitting the statement. This is because the documentation must be prepared by the end of the 10th month following the end of the tax year (rather than by the end of the 11th month, as was the case with the previous TPR statement).
Clarification of the rules on domestic adjustments
The draft dispels a significant interpretative uncertainty regarding transfer pricing adjustments (so-called compensatory adjustments) between domestic entities. The current condition of the existence of a “legal basis for the exchange of tax information with the country in which the related entity is resident” (Article 11e of the CIT Act) could suggest that an adjustment is permissible only in relation to cross-border transactions. The proposed amendment clearly indicates that this condition applies only to entities established outside Poland.
New criminal tax sanctions
In addition to deregulatory changes, the draft extends liability under the Fiscal Penal Code. Until now, penalties applied to the failure to prepare transfer pricing documentation, the preparation of such documentation after the deadline, and the preparation of documentation that did not reflect the actual state of affairs. The proposed provisions introduce an additional category of infringement: preparing documentation in a manner inconsistent with the requirements of Article 11q of the CIT Act (i.e. omitting required elements).
Although the UDER107 draft implements calls for deregulation, the elimination of unnecessary procedures, a reduction in business operating costs and a simplification of the tax system, this does not alter the fact that taxpayers will have to take even greater care than before to ensure the completeness and accuracy of transfer pricing documentation. Simplifying the form does not mean relaxing the substantive requirements; on the contrary, the expansion of the catalogue of criminal tax sanctions raises the stakes for any oversight.
Frequently asked questions
Who is subject to transfer pricing obligations in domestic transactions?
These obligations cover controlled transactions between related entities, which means that one of them exerts significant influence over the other. Significant influence occurs, among others, when holding at least 25% of shares or voting rights, as well as in case of family relationships up to the second degree. The regulations apply regardless of whether the transactions are carried out domestically or cross-border.
In what situations can one benefit from exemption from the obligation to prepare local transfer pricing documentation?
Domestic exemption is available when transactions are carried out exclusively with related entities having their registered office in Poland. To benefit from the relief, none of the parties may use entity or zone exemptions, and may not incur a tax loss from the source of income to which the given transaction is classified. Losses from other sources of income do not exclude the possibility of using the exemption.
When using the domestic exemption, do I still need to submit TPR information?
Yes, exemption from the obligation to prepare local documentation does not exempt from the obligation to submit TPR information. Entities using the exemption submit the TPR form in a limited scope, without data required in case of full documentation. It is important to remember the appropriate deadlines for submitting these reports.
When should transfer pricing documentation be prepared and TPR information be submitted for the year 2025?
For taxpayers with a tax year consistent with the calendar year, local documentation must be prepared by October 31, 2026. TPR information should be submitted by November 30, 2026, and group documentation by December 31, 2026. These deadlines apply to reporting for the tax year 2025.
What changes in TPR reporting does the UDER107 bill project provide for?
The project assumes departure from special rules for signing TPR forms in favor of general Tax Ordinance rules, which will enable signing the report by a proxy. Micro and small enterprises will be exempted from the obligation to show financial indicators in TPR information. The changes aim to simplify procedures and reduce administrative burdens.
Does the UDER107 project introduce new sanctions for errors in transfer pricing documentation?
Yes, the project extends fiscal criminal liability to include preparing documentation in a manner inconsistent with statutory requirements, i.e., omitting required elements. This means that taxpayers must carefully ensure the completeness and reliability of documentation, because simplifying the form does not mean relaxing substantive requirements. Any oversight may result in more severe legal consequences.
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I specialize in Polish tax law, particularly income taxes, as well as international tax law. My experience includes, among others. providing ongoing tax advisory services, preparing legal and tax opinions, drafting requests for individual interpretations, conducting tax reviews. I gained professional experience in Warsaw law firms.
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