Documentation thresholds in transfer pricing in 2022
Among the many legislative changes, from 1 January 2022, also those concerning transfer pricing came into force. In particular, they point to formal and documentation issues, including those informing about the thresholds at which homogeneous controlled transactions must be documented.
The transfer pricing documentation is prepared for transactions whose value – in a tax year – exceeds the documentation thresholds:
- PLN 100,000.00 – in the case of a transaction other than controlled transaction with an entity with its place of residence, registered office or management in a country applying harmful tax competition, regardless of the type of transaction. It is sufficient that one of the parties performs transactions with such an entity;
- PLN 500,000.00 – in case of a controlled or other than controlled transaction, if the actual owner of receivables from such transactions has its registered office, management board or place of residence in a “tax haven”. It is sufficient that one of the parties to the transaction makes settlements with such an entity, however, this must be demonstrated with due diligence;
- PLN 2,000,000.00 – in the case of a service transaction and every transaction other than those directly indicated here;
- PLN 10,000,000.00 – in the case of commodity and financial transactions.
The documentation thresholds are set separately for the cost side and the revenue side. To sum up, it should be remembered that they apply to controlled transactions of a homogeneous nature, regardless of the type of transaction, and also in the case of a transaction other than controlled, if its value for the tax year (or – in the case of companies – the financial year) exceeds PLN 500,000.00.
Transfer prices are verified using the method most appropriate in the given circumstances: comparable uncontrolled price, resale price, cost plus, net transaction margin or profit distribution.
Transactions between related parties with their registered office, place of residence or management in Poland in a tax year in which none of them incurred a loss and does not benefit from a tax exemption are exempt from the obligation to prepare transfer pricing documentation.
Transfer pricing in 2022 vs. the Polish Treaty – other changes
Other changes in the case of transfer pricing that have come into force since 2022 mainly concern: the extension of certain deadlines related to transfer pricing documentation, the increase of penalties for its absence, the combination of the return with transfer pricing information or the change to electronic form. Among the most important changes, it is worth pointing to:
- inclusion of a statement on preparation of documentation to the transfer pricing information – TPR declaration;
- Extension of the deadline for preparing transfer pricing documentation – to the 10th month after the end of the tax year;
- Extension of the deadline for submission of TPR-C return – until the 11th month after the end of the tax year;
- Change in the scope of entities entitled to file the return – in addition to the entrepreneur also a proxy who is an advocate, legal adviser, tax adviser or expert auditor;
- Extension of the deadline for submission of documentation to the relevant authorities upon request – up to 14 days after the request
- Extension of the catalogue of transactions exempt from the obligation to prepare local documentation – by credit, loan and bond issue transactions to which the safe harbour mechanism applies;
- Extension of the catalogue of transactions not subject to documentation to include transactions involving recharging;
- Exclusion of micro-entities from the obligation to prepare comparative analysis;
- Increase of the penalties for failure to prepare transfer pricing documentation – up to 720 daily rates;
- Introduction of penalties for preparing transfer pricing documentation after the deadline – up to 240 daily rates;
- Introduction of penalties for the lack of transfer pricing documentation in transactions with taxpayers residing in “tax havens”;
- Electronic preparation of transfer pricing documentation.
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