Changes in Transfer Pricing in 2016 and 2017

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1 Changes in Transfer Pricing in 2016 and 2017

2 Agenda of changes in transfer pricing Definition of related entities Significant transactions Transactions below the limits Obligation to prepare TP docs Changes in the content of the documentation Drawing up the documentation Mandatory review of the TP and benchmarks

3 Definition of related entities Related entities entities that will hold shares (directly or indirectly) in the equity of another entity in the amount of no less than 25% (currently 5%). up to 31 December 2016 A B from 01 January 2017 B A

Significant transactions in the range EUR 2-20 million in the range EUR 20-100 million above EUR 100 million the

over EUR 2 million the total value of transactions of a given kind is at least EUR 140,000, increased by EUR

4 Significant transactions in the range EUR 2-20 million in the range EUR million above EUR 100 million the total value of transactions of a given kind is at least EUR 50,000, increased by EUR 5,000 for every EUR 1 million over EUR 2 million the total value of transactions of a given kind is at least EUR 140,000, increased by EUR 45,000 for every EUR 10 million over EUR 20 million the total value of transactions of a given kind is at least EUR 500,000

4 Other significant events joint venture agreement TP if the value in the agreement or the

5 Other significant events liquidity management agreement determining the TP obligation as in slide no. 4 Other significant events joint venture agreement TP if the value in the agreement or the anticipated value > EUR 50,000 cost distribution agreement determining the TP obligation as in slide no. 4 Company agreement which is not a legal person TP if the contributions > EUR 50,000

Transactions below the limits Obligation to prepare tax documentation (within thirty (30) days from the date of delivery of the request by the tax authority) for transactions or

6 Transactions below the limits Obligation to prepare tax documentation (within thirty (30) days from the date of delivery of the request by the tax authority) for transactions or events below the limits if the circumstances of the case provide that the value of the transaction could be underestimated in order to avoid the obligation to draw up the documentation

7 Documentation obligation four (4) levels Country by Country (to be drawn up by the parent company established in PL) Master File Benchmarking Local File R e v e n u e s EUR 750 milion* *consolidated revenues EUR 20 million EUR 10 million EUR 2 million or costs

8 Changes in the content of the documentation Local file items a description of the transaction (type and subject-matter, financial data of the transaction, identification of the entities, course of the transaction, calculation of incomes) a description of the taxpayer's financial data (objective comparison of settlements with data arising out of the approved financial statements) a description of the taxpayer (organisational structure, type of activity, economic strategy) documents (contracts, agreements, and other documents relating to the transaction)

Changes in the content of the documentation Benchmarking A comparison of data set by independent entities (external comparison) A comparison of data set with an independent entity (internal

9 Changes in the content of the documentation Benchmarking A comparison of data set by independent entities (external comparison) A comparison of data set with an independent entity (internal comparison) together with the data source Comparable data for entities having its registered seat or Management Board on the territory of the Republic of Poland, if the data are available for the taxpayer In the case of a lack of data description of the compliance of the terms and conditions by and between related parties with the ones which would be established by and between independent entities

the group description of significant intangible assets held, created, developed, and used by the group description of the financial situation

10 Master File Changes in the content of the documentation indication of the related entity which produced the information on the group of related entities organisational structure of the group transfer pricing policy applied by the group description of the activities pursued by the group description of significant intangible assets held, created, developed, and used by the group description of the financial situation of the entities together with consolidated statements description of agreements on tax matters entered into by the entities that make up the group

Drawing up the documentation Submission (currently) Drawing up (additionally from

authority seven (7) days from the date of delivery of the request No changes from

transfer pricing documentation submitted together with the annual tax return not

11 Drawing up the documentation Submission (currently) Drawing up (additionally from 2017) time limit for the submission of documentation at the request of the authority seven (7) days from the date of delivery of the request No changes from 2017 taxpayer's obligation to make a statement on the preparation of the complete transfer pricing documentation submitted together with the annual tax return not later than by the date of submission of the tax return for a given tax year by each year

12 Mandatory review of the documentation (no less than once a year) of the benchmarks (no less than once every three (3) years)

Transfer Pricing - Poland Significant changes to documentation requirements - update Tax Alert 06/2015

June 23, 2015 Transfer Pricing - Poland Significant changes to documentation requirements - update Tax Alert 06/2015 Poland plans to introduce significant changes to the transfer pricing documentation