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Test if your company is obliged to prepare mandatory transfer pricing documentation for year 2018 or 2019, 2020, 2021:

Transfer Pricing documentation for 2021- changes

Basically the same set of new rules mandatory as from 2019 also apply in 2021. However, in 2021 anti-tax haven rule was introduced. For tax years starting after 31 December 2020, for example for transactions carried out in calendar year 2021 taxpayers have to verify whether their transactions are connected with tax havens. Art. 11o sec. 1a of the Corporate Income Tax ACT says that local file for transfer pricing should be prepared if the beneficial owner of the payment is located in a tax haven. This applies to controlled transactions, as well as uncontrolled transactions, regardless whether domestic or cross-border. In case of doubt, it is deemed that the beneficial owner is located in a tax haven, if the other party to the transaction makes payments to an entity in a tax haven. In other words, in case a taxpayer makes a purchase and the supplier makes payments to an entity in a tax haven , then the tax payer has to prepare transfer pricing documentation for the purchase. The threshold of the purchase and the payment is 500 000 PLN. Due diligence should be exercised to judge if the supplier makes such payments. Special verification procedures, including statements should be applied. The degree of detail depends on circumstances. Solution: in most cases the supplier may make a statement that he is the beneficial owner. Then, the obligation to prepare transfer pricing documentation will not arise, if such a statement does not raise doubts.

Changes introduced in year 2019

The threshold and exemptions introduced in 2019 are still valid for year 2020 and year 2021

Since 2019 the thresholds are changed significantly and are increased to:

• • 10 mln PLN in case of goods (material goods) and financial services transactions
• • 2 mln PLN in case of services and other transactions

The domestic transaction is exempt from the documentation requirement if the parties do not have a tax loss and do not benefit from some tax reliefs (e.g.: special economic zones, support of investment).

Option for year 2018

For 2018 the law gives taxpayers the right to choose which rules regarding documentation you wish to apply for year 2018:

• • either those obligatory for year 2018, or
• • those obligatory for year 2019

In many cases taxpayers will choose for year 2018 the new rules, because they are more favourable.

In the past, in 2017 and 2018 there were two thresholds:

1. In regard to the entity : total earnings or total costs above 2 mln Euro in the preceding year
2. In regard to the transactions: the gross value of the transaction above 50 000 Euro (or higher, if your earnings were higher) in the current year.

If you met both thresholds, there was obligation to prepare the local file.

Penalties

Since 2019 a penalty is introduced for reporting income (loss) outside the expected arm’s length amount. It is 10% on the adjustment made by the tax administration, or 20% if you do not have mandatory tax documentation, or 30% if the adjustment is above 15 mln PLN and there is no transfer pricing documentation.

Until the end of 2018 the penalty was only in case the tax payer did not present the transfer pricing documentation – a special increased rate of tax was applied to the adjusted amount – 50% instead of the regular 19%.

Our professional practice was started in 1992. We have experience in providing tax and management consulting services.

We optimize business structure and business transactions to minimize tax liabilities. We also provide security of running a business by adjusting business strategy to economic law, practice of tax authorities and case law.
We also advise our clients how to boost efficiency of business and how to improve company market value.
We also analyze the company's business position, analyze threats, look for opportunities, design business plans, design adequate business structures and prepare feasibility studies.

Please click on the right the “News” section  to find the most recent up-date on tax changes – changes in the law, or rulings or court judgements. If you have any further queries, please contact us. Short or general answers are free. 

We have professional experience in providing services for:

• to Multi National Enterprises (MNE),
• to local affiliate companies;
• to act as power-of-attorney in tax investigations and court proceedings.

Our work is supervised by professional: Hanna Szarpak – licensed tax adviser

Hanna Szarpak – licensed tax adviser No. 446

Licensed tax adviser.
Expert on finance, experienced as a financial director in a large, multinational group (eight years) and a tax manager in PriceWaterhouse (three years).
Specializes in international taxes, transfer pricing, leasing and many other issues concerning tax and finance.

Experienced lecturer in renowned tax trainings for accountants and managers.

In the 90's adviser to the Minister of Finance on tax issues.
Experienced attorney in tax proceedings during tax investigations and in the Chief Administrative Court.

We have various specialized experts associated with our office.
With their cooperation we can take care of large projects in all areas of business.
References on request provided the client agrees.