Transfer pricing is the pricing applied to transactions performed by affiliated companies.
Through the sale of goods or services, affiliated companies are obliged to establish fixed pricing while maintaining the arm’s length principle. According to this principle, pricing used in transactions with affiliated companies needs to adhere with market prices established by non-affiliated companies.
Since 2019, the Local File documentation is prepared for controlled transactions of a single kind, the value of which exceeds the following documentation thresholds:
- 10 000 000 PLN - in the case of goods transactions;
- 10 000 000 PLN - in the case of financial transactions;
- 2 000 000 PLN - in the case of service transactions;
- 2 000 000 PLN - in the case of any other transactions not specified in pt. 1-3.
Tax authorities can request the preparation and submission of transfer pricing documentation, including controlled transactions, the value of which does not exceed the documentation threshold. Since 2021, the obligation to prepare appropriate documentation may also emerge in transactions with non-affiliated entities.