Transfer pricing

The obligation to prepare the Local File applies to the highest amount of taxpayers. The Local File documentation of transfer pricing is prepared for controlled transactions of a single kind, the value of which exceeds the following documentation thresholds during a tax year:

1. 10 000 000 PLN - in the case of goods transactions;
2. 10 000 000 PLN – in the case of financial transactions;
3. 2 000 000 PLN – in the case of service transactions;
4. 2 000 000 PLN – in the case of any other transaction not specified in pt. 1-3. Dynamic changes of legislation during the last few years introduced new documentation obligations for affiliated companies, changed reporting rules, and introduced new sanctions.

KR Group experts will analyze your obligations in regards to transfer pricing, check the possibility of applying exemptions in documentation, and will prepare transfer pricing documentation in accordance with Polish regulations. We are also able to assist you in preparing transfer pricing documentations in English, in accordance with OECD guidelines.

The obligation of Master File documentation applies to taxpayers who: 1) prepare consolidated financial statements 2) consolidated income in the preceding fiscal year exceeded the equivalent of 200 000 000 PLN As opposed to the Local File, the Master File focuses on information concerning the capital group. The document should include such information as:

• Group description;
• A description of the group’s essential intangible and legal values;
• A description of the group’s essential financial transactions;
• Data from the group’s consolidated financial report.

The Master File may be prepared in English by another entity from the capital group, provided that it will comply with all regulations set forth by the Polish legislator and that a Polish translation of the document will be presented within 30 days. KR Group will support you in preparing the Master File (in both English and Polish), and will also conduct an audit of your current documentation.

An obligatory element of transfer pricing documentation is an analysis of transfer pricing (benchmark analysis) or a compliance analysis. Both of these variants are subject to being updated at least every 3 years, unless a change in economic environment or of transaction terms justifies a more frequent preparation of such analyses. The benchmark analysis is the data analysis of non-affiliated entities or of transactions conducted with non-affiliated entities, or between non-affiliated entities considered comparable to the terms and conditions established in controlled transactions. The compliance analysis is an analysis reviewing the compliance of conditions according to which a controlled transaction was made, with conditions that non-affiliated entities would establish. This analysis is carried out when a benchmark analysis is not appropriate in light of a given method of transfer pricing verification, or when it is not possible while maintaining due diligence. Both the benchmark and compliance analyses are indispensable tools for tax payers and tax authorities because they justify market-based conditions established by affiliated companies in transactions they conduct with one another. KR Group will assist you in preparing and updating the analyses.

The transfer pricing policy is a document indicating the business model of intragroup settlements agreed upon by the group. The policy describes the rules affiliated companies follow when conducting transactions. As opposed to transfer pricing documentation, the transfer pricing policy applies to future transactions. Transfer pricing policy:

• Introduces common rules of intragroup settlements;
• Unifies calculation rules of transfer pricing on the group level;
• Develops the verification of market level transfer pricing.

A well-prepared model of capital group settlements will systematize the model of settlements, optimize time, and will serve as a method of defense during potential transfer pricing inspections.

Dynamically evolving legislation pertaining to transfer pricing, as well tax authorities’ growing interest in the subject of transfer pricing being tantamount with an increasing amount of transfer pricing inspections, are good reasons to delegate the verification of transfer pricing obligations.

The year of 2021 further expanded transfer pricing obligations. In a few cases, transfer pricing may also apply to transactions with non-affiliated entities. Taxpayers are advised to exercise more vigilance when transactions of a single kind with contracting parties exceed the annual threshold of 500 000 PLN. The practical effects of new regulations for taxpayers mean: - presumption of a beneficial owner in a tax haven; transferring the burden of proof onto the taxpayer with the obligation to exercise due diligence while determining this circumstance. KR Group will assist you in implementing the due diligence procedure and will secure your interests through the proposal of suitable provisions in contracts concluded with contracting parties. KR Group experts will also verify whether concluded transactions will cause an entry into the regime of transfer pricing rules, and in extreme cases will assist in fulfilling documentation obligations.