Changes to the Minister of Finance Decree on transfer pricing – part 10: Low value adding services – narrative (description) of these services

The change of 17 June 2013 to the transfer pricing Decree in Poland introduced the notion of „low value adding services”. This term comes from the Report prepared by the EU JTPF – that is Joint Transfer Pricing Forum established by the European Commission.

The report suggests, that the examination of these services should be simplified, since these are routine and generally available services. The examination, whether the services have been actually rendered and whether they could bring a benefit to the company should be limited to the information contained in this special narrative made by the taxpayer.

The change introduced to the Decree in Poland provides as follows:

“If the associated entity presents to the controllers a description of the transaction concerning the low value adding services the controllers make the audit (..) on the basis of the presented description, in the first place.”

Then, the Decree lists some of the elements of this description, like:

“ 2. confirmation that the service has been rendered and detailed description of the rationale behind the purchase of these services, including benefits received or expected;

3. description and justification of the mode the service was rendered;

6.desciption of the allocation key;”

We hereby stress very strongly, in spite of what is commonly heard, that this description is a matter of the good will of the taxpayer and its intention is to simplify tax examinations of these service, since these services are routine and of low value.

Prepared by Tax Advisory Company TCA Advisers Sp.z o.o. , Konstancin-Jeziorna, Warsaw

NOTE: This material is prepared for information purposes only – care was taken to make it as simple and clear as possible, so it is not complete nor precise enough to be the basis for any action in practice – therefore, in case you need to resolve your particular situation, please seek professional tax advice.