The law firm HWW Hewelt Wojnowski Lindner and Partners specializes in comprehensive transfer pricing consulting, offering a full range of services related to this area of tax law. We work in English with Polish subsidiaries of international groups, foreign investors operating in Poland and Polish companies transacting with related parties abroad.
Transfer pricing services - scope of support
- Transfer pricing consulting - We provide professional transfer pricing consulting to help our clients understand and implement appropriate strategies to comply with applicable regulations.
- Preparation of transfer pricing documentation - Our team handles the preparation of Local File transfer pricing documentation for related party transactions, with a view to meeting the documentation requirements applicable to the relevant period.
- Benchmarking studies - As part of the documentation work we prepare comparability analyses for controlled transactions: defining the tested party and the method, selecting comparables, calculating the arm’s length range and describing the study in the documentation.
- TPR reporting - We support taxpayers in preparing the Polish transfer pricing information (TPR) and throughout the submission process.
- Analysis of related party transactions - We conduct a detailed analysis of related party transactions, identifying potential risks and proposing ways to address them.
- Valuation of transactions - We support the valuation of transactions and assess whether the applied terms are consistent with the arm’s length principle.
- Advance pricing agreements (APA) - We advise clients preparing applications for advance pricing agreements and support them throughout the APA process.
- Defence in audits and proceedings - We defend the transfer pricing method and documentation chosen by the taxpayer before the Polish tax authorities.
Transfer pricing obligations in Poland
Polish transfer pricing rules follow the arm’s length principle: terms agreed between related parties should correspond to terms that unrelated parties would have agreed. As a general rule, taxpayers whose controlled transactions exceed the statutory documentation thresholds prepare Local File documentation, group documentation takes the form of a Master File, and taxpayers submit the transfer pricing information (TPR) for the reporting period. The thresholds, exemptions and deadlines depend on the category and value of the transaction and have changed repeatedly in recent years, which is why we verify the rules applicable to the specific year of the transaction rather than relying on generalised summaries.
Failure to comply may expose the taxpayer to an additional tax liability and the persons responsible to fiscal penal sanctions, so the documentation and reporting calendar deserves the same attention as the pricing itself.
Further reading
- Transfer pricing in capital groups: how to avoid tax sanctions
- Transfer pricing in domestic transactions
- Tax due diligence: what to check before a transaction
- Tax law services
FAQ - frequently asked questions about transfer pricing
What are transfer prices?
Transfer pricing concerns the prices and other financial terms agreed in transactions between related parties, for example within a corporate group. These terms should be set on arm’s length terms, that is, as if the transaction had been concluded between unrelated parties (the arm’s length principle).
When does the transfer pricing documentation obligation apply in Poland?
The documentation obligation applies to taxpayers entering into transactions with related parties which meet the conditions set out in the tax regulations, where the value of transactions with a related party exceeds the statutory documentation thresholds in a given tax year.
Which methods are used to determine transfer prices?
Five methods are used most often: the comparable uncontrolled price method, the resale price method, the cost plus method, the transactional net margin method and the profit split method. The choice depends on the specifics of the transaction.
What are the Local File and the Master File?
The Master File is group documentation describing the structure and policy of the group; the Local File is a detailed description of the transactions and a justification of the prices for the specific taxpayer. Both documents serve to demonstrate compliance with the arm’s length principle.
What sanctions apply for missing transfer pricing documentation?
Tax and fiscal penal sanctions. Tax sanctions take the form of an additional tax liability where the entity reports an undue or overstated tax loss or fails to report all or part of its taxable income. Fiscal penal sanctions may take the form of fines for the persons responsible for preparing the documentation.
How does a transfer pricing adjustment by the tax authority work?
The authorities may carry out an audit, compare the terms of the transaction with arm’s length terms, adjust the taxpayer’s income and assess outstanding tax with interest if they conclude that the transactions were not carried out on arm’s length terms.
Do all transactions with related parties have to be documented?
Not every transaction requires full documentation; the obligation depends on the type, value and nature of the transaction and on the statutory documentation thresholds and exemptions.
How is a benchmarking study prepared?
A benchmarking study requires defining the transaction and the tested party, selecting the verification method, determining the criteria and data sources, searching for and screening comparable entities, calculating the relevant indicators for the appropriate period, applying comparability adjustments, determining the arm’s length range or median, and describing the study concisely in the documentation.
What should be considered when settling intra-group services?
It is worth documenting the scope of the services, the cost allocation method and the margin, the justification of the costs, and evidence that the settlements correspond to arm’s length terms (agreements, reports).
How have the OECD/BEPS initiatives affected Polish transfer pricing rules?
The BEPS initiatives increased documentation requirements (for example the Master File, the Local File and country-by-country reporting), focusing on transparency, scrutiny of intangibles and the allocation of profits between jurisdictions.
