Transfer Pricing Country Summary Poland

Transcription

1 Page 1 f 12 Transfer Pricing Cuntry Summary Pland March 2018

2 Page 2 f 12 Legislatin Existence f Transfer Pricing Laws/Guidelines Article 11 f the Crprate Incme Tax Act ( CIT ) serves as the legal basis fr applying the arm s length principle. It als defines the cncept f related parties and lists transfer pricing methds available t tax authrities when assessing the taxpayer s incme. The statutry transfer pricing dcumentatin requirements, including the definitin f entities bliged t prepare it and the required items f such dcumentatin, are intrduced in the article 9a f the CIT. The abvementined regulatins have their equivalent in the Persnal Incme Tax Act (articles 25 and 25a, respectively). The Plish transfer pricing regulatins in general fllw the OECD Transfer Pricing Guidelines. Hwever, these guidelines are nt frmally accepted as the surce f law in Pland. In practice, the OECD Transfer Pricing Guidelines are cnsidered supprting reference material nly. Furthermre, it shuld be nted that: articles 9a and 11 f the Crprate Incme Tax Act f 15 February 1992 (Jurnal f Laws f 2017, item 1753 as amended), Decree f the Minister f Finance f 10 September 2009 n the methd and prcedure fr assessing legal persn's incme by estimating the prices and the methd and prcedure fr eliminating duble taxatin f legal persns resulting frm adjustment f related parties prfits (Jurnal f Laws n. 160, item 1268 as amended), Decree f the Minister f Finance f 12 September 2017 n the infrmatin t be included in transfer pricing dcumentatin in the field f crprate incme tax (Jurnal f Laws frm 2017, item 1753), apply t certain transactins with entities lcated in jurisdictins applying harmful tax cmpetitin, even if the cunter party in such a lcatin is nt a related party. In additin, article 9a applies t nnresident taxpayers carrying activities thrugh a permanent establishment lcated n Plish territry. Transfer Pricing Scrutiny The audit risk is medium t high fr all types f transactins and ther events. In 2014, the Ministry f Finance appinted a special transfer pricing audit team. It was tasked with supprting ther tax authrities in cnducting transfer pricing audits with their expertise and t share access t external databases fr benchmarking studies, such as Amadeus, and ther databases, e.g. fr ryalties and financial transactins. The aim was fr audits t becme mre substantive. In January 2015, a Cmpetence Center fr Transfer Pricing at the Tax Chamber in Łódź was established. Sample tasks f cmpetence centers include: detailed analysis f industries, issues and risks assciated with them, crdinatin f detectin activities and selectin f entities fr tax audit. Cmpetence Center fr Transfer Pricing crdinates tax audits twards large entities perating within transnatinal crpratins. Additinally, in 2017 Transfer Pricing and Valuatin Department was established t shape the Minister f Finance s plicy in the field f transfer pricing (i.e. preparing legislative slutins with regard t transfer pricing regulatins, develping guidelines fr taxpayers, internatinal cperatin with ther jurisdictins, preparing ecnmic valuatins and analyses fr tax purpses). Transfer Pricing and Valuatin Department has emplyed a number f experienced practitiners well-versed in transfer pricing matters. The number f transfer pricing audits in 2016 was up by abut 59% (vs. 2015) and the value f transfer

3 Page 3 f 12 pricing adjustments bsted frm PLN 29 millin (in 2015) t PLN 657 millin (in 2016). The Ministry f Finance-released data shw that transfer pricing audits are becming mre and mre imprtant and taxpayers applying harmful tax plicy pay much bigger penalties. The Ministry keeps training transfer pricing specialists t expand their knwledge. Intangible assets transactins, including management services and ryalties, as well as financial transactins (such as lans and guarantees), are under special scrutiny f tax authrities. Definitin f Related Party Accrding t Plish regulatins (article 11 f the CIT) tw parties are cnsidered related in these situatins: Dmestic entity and freign entity a natural persn, legal persn, r an rganizatinal unit having n legal persnality, having their place f residence, seat r management ffice in the territry f the Republic f Pland (dmestic entity), participates directly r indirectly in managing r cntrlling an enterprise lcated utside the territry f the Republic f Pland r has shares in its capital; r a natural r legal persn, r an rganizatinal unit having n legal persnality, having their place f residence, seat r management ffice utside the territry f the Republic f Pland, (freign entity), participates directly r indirectly in managing r cntrlling a dmestic subject r has shares in its capital; r the same natural persn, legal persn r an rganizatinal unit having n legal persnality at the same time participates directly r indirectly in managing r cntrlling a dmestic subject and a freign subject r has shares in their capital Tw dmestic entities a dmestic subject participates, whether directly r indirectly, in the management f anther dmestic subject r its cntrl r hlds a share in the capital f anther dmestic subject r the same natural persn, legal persn r an rganizatinal unit having n legal persnality at the same time participates directly r indirectly in managing r cntrlling dmestic subjects r has shares in their capital. Starting 1 January 2017, cntrl is understd as a direct r indirect invlvement in management, supervisin r share capital f at least 25% in the cntrlled entity. The abvementined prvisins regarding tw dmestic entities als apply t family, capital, prperty r emplyment relatins between dmestic entities r persns engaged in management, supervisin r cntrl in these entities r when any f the abve persns cmbine managerial, supervisry r cntrl functins fr these entities. Plish transfer pricing regulatins als apply t entities cnducting peratins in Pland thrugh a permanent establishment and t the allcatin f prfits between a permanent establishment and the head ffice. In 2018 (applicable retrspectively frm 2017), entities which culd be classified as related slely n the basis f cnnectin between them thrugh the State Treasury r a lcal gvernmental unit were excluded frm TP bligatins.

4 Page 4 f 12 Transfer Pricing Penalties If the tax authrities decide that the remuneratin fr a transactin is nt in line with the arm s length principle but the taxpayer did file the dcumentatin, tax authrities may estimate taxpayer s prfit and tax it at a 19% tax rate. If the taxpayer fails t file the dcumentatin n the tax authrities request, it must pay a 50% tax rate n prfit estimated by fiscal authrities. There are sanctins under penal and fiscal cde fr failure t file the statement n having prepared tax dcumentatin and CIT TP frm r fr making a false statement. Advance Pricing Agreement (APA) Regulatins relating t an APA are in frce in Pland since 1 January The APA regulatins set ut three different types f agreement s, depending n the type f related parties invlved: 1. Unilateral: Dmestic (fr transactins between dmestic entities); r Freign (fr transactins between a dmestic entity and a freign entity). 2. Bilateral (fr transactins with a freign related entity, subject t acceptance by a freign tax authrity cmpetent fr the freign entity). 3. Multilateral (fr transactins with freign related entities f mre than ne cuntry, subject t acceptance by the freign tax authrities cmpetent fr the freign entities). The APA is made by a decisin issued by the Minister f Finance. The deadlines fr the Minister f Finance t issue the decisin with respect t an APA are: Unilateral agreement - within 6 mnths after the prcedure launch date; Bilateral agreement - within 12 mnths after the prcedure launch date; and Multilateral agreements - within 18 mnths after the prcedure launch date. Bilateral and multilateral agreements are made by the Minister f Finance with the tax authrity cmpetent fr the ther party t the transactin (an entity related t the taxpayer). Once an agreement is signed, an administrative decisin is issued fr the taxpayer. The APA decisin cvers: (i) transfer pricing methd and calculatin algrithm(s) and (ii) terms and cnditins fr using the TP methd apprved. APA is binding n the tax authrities and they cannt challenge the transfer price if the actual transactin is in line with the assumptins f the APA decisin. In practice, even entering an APA prcedure ffers sme prtectin as the tax ffice usually des nt

5 Page 5 f 12 launch an audit if a transactin is discussed at the Ministry level. An APA is binding fr up t five years. Hwever, it may be extended fr a further five year perid (prvided the critical assumptins f the methdlgy used are nt changed and the taxpayer applies fr the extensin f the agreement at least 6 mnths befre it expires). The Ministry f Finance impses an administrative fee fr an APA applicatin. In general, it is equal t 1% f the transactin value. Hwever, the fllwing ranges are used: 1. Unilateral agreement: in the case f dmestic entities: PLN 5,000 minimum PLN 50,000 maximum; and in the case f a freign entity: PLN 20,000 minimum PLN 100,000 maximum. 2. Bilateral / Multilateral agreements: PLN 50,000 minimum PLN 200,000 maximum. The fee fr extending an APA is equal t half the fee due fr the initial APA applicatin. As f 1 January 2016, an APA can be cnducted by entities withut legal persnality and the prvisins f a prir agreement may be applied earlier, i.e. frm when the taxpayer frmally applies t the Ministry f Finance (the prvisins befre the amendment did nt prvide fr such a pssibility and the prvisins f the APA culd be applied frm the date when APA decisin was served by the Minister f Finance t the taxpayer). APA is the nly tl that can be used t secure transfer pricing. Additinally, the draft amending CIT law was signed by the President n 22 Nvember Amendment f CIT law intrduces these mdificatins: Unlimited expenditures n intangible services in the case f APA The amendment adpted prvides fr a pssibility f recgnizing all intangible and legal assets as csts f revenues nly if the taxpayer enters int the Advanced Pricing Agreement (APA) with the Chief f Natinal Tax Administratin (NTA). Such a general rule can be applied fr the APA term as well as the tax year when the decisin was made and the year befre. Abandned bligatin t prepare transfer pricing dcumentatin fr transactins cvered by APA Taxpayers wh have signed an APA have anther advantage. APA is an effective methd f mitigating tax risk and frm 1 January 2018 it additinally lifts dcumentatin bligatins n transactins being under such an agreement fr taxpayers wh will receive decisin regarding APA frm the Chief f NTA. Arm s length nature f the transactins in tax capital grups (TCG) Since 1 January 2018, prvisins were repealed under which cmpanies setting up TCGs culd agree n the cnditins fr transactins which differ frm thse which unrelated entities wuld apply. Therefre, starting 1 January 2018 entities being part f TCG must set the terms and cnditins f transactins made with ther members f TCG at arm s length.

6 Page 6 f 12 Mrever an exclusin was intrduced frm the bligatin t prepare transfer pricing dcumentatin between entities which are part f TCG. Such an bligatin will nly apply t transactins r ther events between entities f TCG with related parties utside the TCG. Dcumentatin And Disclsure Requirements Tax Return Disclsures 1. Plish entities (legal and natural persns) must file infrmatin n revenues paid ut t freign entities (bth related and unrelated) and derived frm dividends, interests, ryalties, intangible services, etc. (deadline: by the last day f the third mnth f the year fllwing the tax year); 2. In their tax returns Plish taxpayers under Crprate Incme Tax Act state that they have prepared transfer pricing dcumentatins (deadline: by the last day f the ninth mnth f the year fllwing the tax year). The statements d nt cver Master File dcumentatin. Level f Dcumentatin The regulatins amended cncerning transfer pricing became valid n 1 January The mst significant change is that under the new regulatins taxpayers bligatins are differentiated by revenues / csts value (in accrdance with accunting regulatins) exceeded in the previus tax year. Additinally, the value threshld f transactins r thers events triggering the dcumentatin bligatin als depend n taxpayers revenues/csts. The dcumentatin bligatins frm 1 January 2017 are presented in the table belw. INCOME/COST PREVIOUS YEAR (EURm 1 ) THE VALUE THRESHOLD OF ONE TRANSACTION/ OCCURRENCE (EURk) <2 - DOCUMENTARY OBLIGATIONS Nne 2 Please nte that the transactin f belw EUR 2 millin must be in accrdance with arm s length principle Obligatins: Lcal file which includes descriptin f taxpayer and transactin, financial data, descriptin f methd and manner f calculatin prfits with justificatin, descriptin f business envirnment, reference dcuments (i.e. agreements), A statement n having prepared the cmplete tax dcumentatin within the statutry perid Obligatins: 1 The value presented in EUR are cnverted t PLN at the average rate published by NBP, valid n the last wrking day f the fiscal year previus t the fiscal year which the dcumentatin cncerns. 2 The limit des nt apply t transactins with cmpanies frm tax havens.

7 INCOME/COST PREVIOUS YEAR (EURm 1 ) THE VALUE THRESHOLD OF ONE TRANSACTION/ OCCURRENCE (EURk) DOCUMENTARY OBLIGATIONS Page 7 f All f the abve, Benchmark taking int accunt Plish cmparative data, Simplified financial statements cnsidering transactins and ther ccurrences between related entities (CIT-TP, PIT-TP) Obligatins: All f the abve, Master file including identificatin f the related entity which prepared the Master file, descriptin f rganisatinal structure f the Grup, transfer pricing plicy, descriptin f the subject f business activities cnducted by the Grup, descriptin f financial state f the Grup, descriptin f agreements made with fiscal authrities > Obligatins: All f the abve, Cuntry-by-cuntry reprting grup level infrmatin cncerning level f incme, paid taxes, scale f peratins cnducted by ther entities frm the Grup in different cuntries (bligatin fr grups in which parent cmpany that cnslidates financial statements is based in Pland). Taxpayers cnducting transactins, partnership agreements r jint venture agreements with entities based in tax havens must prepare transfer pricing dcumentatin if the value f the transactin r agreement exceeded EUR 20,000 Taxpayers cnducting partnership agreements r jint venture agreements with related entities are bligated t prepare transfer pricing dcumentatin if the value f input r the value f jint venture agreement exceeded EUR 50,000 Under the regulatins in frce since January 2017, all restructuring transactins must be presented in Lcal File and Master File. The restructuring shuld be understd as (i) transfer f significant functins, assets, risks r (ii) change f structure r legal frm. The infrmatin n restructuring must als be included in CIT TP frm. The restructuring dcumentatin is a specific ne and besides the standard items listed in Article 9a f the CIT Act/25 f the PIT Act, it als cvers additinal elements (such as descriptin f ther realistic available ptins) set frth in the Decree f the Minister f Finance f 10 September 2009 n the methd and prcedure fr assessing legal persn's incme by estimating the prices and the methd and prcedure fr eliminating duble taxatin f legal persns resulting frm adjustment f related parties prfits. Lcal File requirements Plish regulatins addressing Lcal File dcumentatin came int frce n 1 January The bligatin fr preparing Lcal File dcumentatin is impsed if a taxpayer s (r partnership s) revenues r csts (as defined by the Accunting Act) exceeded the threshld f EUR 2m in the previus tax year. The Lcal File shuld feature:

8 Page 8 f Descriptin f the transactin (including cash pling agreements and cst cntributin agreements): indicatin f the type and subject f the dcumented transactin, financial data, identificatin data f entities invlved in this transactin, descriptin f the curse f dcumented transactins (in the frm f functinal analysis). 2. Descriptin f taxpayer s financial data r data frm financial reprt (in the case f taxpayers receiving revenue frm shares in partnership), 3. Infrmatin abut taxpayers, including: rganizatinal and management structure, subject and scpe f business activities, implemented business strategy including restructuring, business envirnment. 4. Dcuments, in particular: agreements, APAs, Obligatry descriptin f methd and manner fr calculating prfits in the frm f descriptin f being aligned with market cnditins. 5. Descriptin f analysis prepared n the basis f data f unrelated entities r data agreed n with unrelated entities identified as cmparable t cnditins established in transactin required nly frm entities whse revenue r csts exceeded EUR 10m in the previus tax. Benchmarking requirements Under the new transfer pricing regulatins, a benchmarking study shuld include data n the cmparable entities whse headquarters r management is lcated n the Plish territry. The apprach t be displayed by Plish Tax Authrity twards Pan-Eurpean benchmarking studies prepared by the Grup is unknwn at this pint. We believe they will be accepted yet based n the current tax practice it is likely that such studies wuld have t include Plish entities in the analysis prcess and, ideally, within the accepted cmpanies. Absence f Plish cmparables triggers a high risk that the study will be challenged by Plish tax authrities in which case Transfer Pricing Dcumentatin Lcal File may be assessed as incmplete and a 50% tax rate may apply. Unfrtunately, even if the Plish entities cnditin is met, during a tax audit Plish tax authrities may still ask fr a benchmarking study based n the Plish database Quick TPA, t which they have access. Reprt frm benchmarking study shuld feature: 1. An indicatin f the assciated entity which was chsen as the tested party and an explanatin f the reasn fr this chice, 2. A summary f the main assumptins made while perfrming the analysis and an explanatin f the reasns behind these assumptins, including: Characteristics f gds r services being the subject matter f the analysed transactin,

9 Page 9 f 12 The curse f transactin, including functinal analysis, The cnditins f the cmparable transactins between unrelated parties, business strategy f assciated entities and market cnditins if they affect the value f the transactin, 3. An explanatin f the reasns fr applying multi-year r ne-year data, 4. Data n cmparable business peratins between unrelated entities, including data n the relevant financial indicatrs and data n business peratins rejected during the prcess f benchmarking study because f incmparability with analysed transactin, including the surce f data, 5. A descriptin f any cmparability adjustments made t eliminate the differences between cmparable transactins, 6. A descriptin f prfitability indicatrs applied. Master file requirements Plish regulatins addressing Master File dcumentatin came int frce n 1 January The bligatin fr preparing Master File dcumentatin is impsed if a taxpayer s (r partnership s) revenues r csts (as defined by the Accunting Act) exceeded the threshld f EUR 20m in the previus tax year. The Master File shuld feature such elements as: 1. Identificatin f the related enterprise which had prepared Master File; 2. The grup s rganizatinal, legal and peratinal structure (including an rganizatinal chart, a list f grup members and a descriptin f the participatin f the parent cmpany in the subsidiaries); 3. Descriptin f the principles fr determining transfer prices (transfer pricing plicy): methd f allcating the cst f intragrup services and determining the remuneratin fr intragrup services, presentatin f R&D wrks made within the Grup, the summary f remuneratin payable due t use r share f intangible assets between related entities, manner f financing the entities within the Grup; 4. Descriptin f the subject and scpe f business activities made by the Grup: general descriptin f functins perfrmed and risks assumed, including the descriptin f changes in respect f functins and risks cmpared t previus tax years, e.g. the change frm a full-fledged distributr t a cmmissinaire; majr factrs affecting the prfit, list f majr services transactins, infrmatin abut the largest suppliers and recipients, gegraphical allcatin f main markets f business activities, significant mergers, acquisitins and sales f investments, descriptin f accmplished restructuring (i.e. the transfer f essential functins, assets and risks); 5. Descriptin f essential intangible assets used within the Grup shuld include: Strategy fr develpment, pssessin and use f intangible assets by each related entity in the Grup,

10 Page 10 f 12 List f intangible assets wned by entities in the Grup, which are essential t the Grup business activities, including infrmatin abut the legal r ecnmical wner f each intangible asset, List f deals r agreements cncerning intangible assets, including jint venture agreements, R&D agreements and license agreements, Descriptin f changes in wnership r use f intangible assets in given tax year, including changes in legal r ecnmical wnership as well as changes f the entity using each intangible asset, 6. Descriptin f financial situatin within the Grup; 7. Descriptin f agreements made with fiscal authrities; descriptin f incme tax agreements made by entities frm the Grup with tax authrities ther than Plish, which includes the descriptin f unilateral advance pricing agreements made by related entities frm the Grup. Simplified statement n transactins and ther ccurrences between related entities (s-called CIT-TP) The taxpayers whse revenues r csts in the current tax year exceeded EUR 10 millin must prepare the CIT-TP frm. It enables tax authrities t select taxpayers and the transactins t be subject t a ptential tax cntrl in the field f transfer pricing. The taxpayers must fill in mre than 140 items in the CIT-TP frm. It is divided int 6 main categries: Data identifying the taxpayer, Identificatin f taxpayers transfer pricing relatinships with related parties, Infrmatin abut related entities Main taxpayer s business activity and functinal prfile, Restructurings, Related party transactins r ther events (divided int 6 subcategries). Additinal infrmatin Accrding t the infrmatin released n 16 February by the Ministry f Finance, taxpayers will be bliged t prepare transfer pricing dcumentatin fr FY 2017 and 2018 by the end f September. Recrd Keeping Taxpayers must keep recrds until the tax bligatin expires, i.e. fr a perid f 5 years frm the end f the calendar year in which the tax fr a given tax year is due. In practice, as the tax return shuld be submitted (and the tax due shuld be paid) three mnths after the end f the tax year, the tax liability fr the tax year 2012 (an example) expires at the end f December 2018 (prvided the tax year matches the calendar year as in mst f the cases). The recrds shuld be kept during this perid. The 50% penalty rate may be applied fr 3 years after the end f the calendar year in which the tax bligatin arse (afterwards, the tax authrity may apply nly the regular 19% rate). Such cnclusins result frm the judgment f the Supreme Administrative Curt f 13 Octber 2016, (ref. II FSK 2288/14).

11 Page 11 f 12 Language fr Dcumentatin The dcumentatin shuld be prepared in the Plish language. Small and Medium Sized Enterprises (SMEs) There are n special transfer pricing rules fr small and medium sized enterprises that wuld deviate frm the general transfer pricing regime. In accrdance with the amended regulatins, small enterprises are excluded frm the transfer pricing regulatins and medium enterprises have limited requirements in accrdance t transfer pricing issues. Deadline t Prepare and Submit Dcumentatin The deadline t prepare the transfer pricing dcumentatin is 31 March (accrding t infrmatin released n 16 February by the Ministry f Finance, taxpayers must prepare transfer pricing dcumentatin by the end f September) and the deadline t submit the dcumentatin is: 7 days fllwing the request f tax authrities fr transactins exceeding the statutry threshlds, r 30 days fllwing the request f tax authrities fr transactins nt exceeding the statutry threshlds, after receiving a request t present such a dcumentatin. The authrities must clarify the reasns fr submitting this kind f request. Additinally, the taxpayer must submit within 9 mnths after the end f fiscal year (accrding t draft versin f Decree): statement f preparatin f the tax dcumentatin, and CIT TP/ PIT-TP frm cnstituting attachment t CIT-8 frm. Statute Of Limitatins The tax liability is enfrceable during 5 years frm the end f the calendar year in which the tax fr a given tax year is due. In practice, as the tax return shuld be submitted (and the tax due shuld be paid) three mnths after the end f the tax year, the tax liability fr e.g. tax year 2012 expires at the end f December 2018 (prvided the tax year matches the calendar year as in mst cases). Transfer Pricing Methds There is n direct reference t OECD accepted methds. Hwever, methds similar t the OECD methds are enacted in a Minister f Finance decree f 10 September 2009 regarding methd and prcedure f determinatin f taxpayers incme as well as the methd and prcedure f eliminating duble taxatin in case f related party prfit adjustment: The traditinal methds: Cmparable Uncntrlled Price ( CUP ); Resale Price; and

12 Page 12 f 12 Reasnable Margin (Cst Plus). The transactinal prfit methds: Prfit Split; and Transactinal Net Margin Methd. These five methds are binding fr the tax authrities fr the purpse f assessing the taxpayer s incme. There is a pririty that traditinal methds shuld be used befre transactinal methds (previusly nly the CUP was indicated as the first-chice methd). If the traditinal methds cannt be applied, the use f the transactinal prfit methds is allwed. Cmparables Starting 1 January 2017 a benchmarking study is an bligatry element f Lcal File. It is bligatry fr taxpayers, whse revenues r csts exceeded in the year preceding the tax year the equivalent f EUR 10,000,000 t include benchmarking studies in the statutry transfer pricing dcumentatin. Accrding t Plish transfer pricing regulatins, an analysis f cmparisn data shall cntain cmparable data cncerning subjects having their seats r management ffices within the territry f the Republic f Pland, prvided that the data is accessible fr the taxpayer (the taxpayer may prepare external benchmarking analysis based n external cmparables r internal benchmarking analysis based n internal cmparables). Obligatry elements f benchmarking analysis have been listed in the Decree f the Minister f Finance f 12 September 2017 n the infrmatin t be included in transfer pricing dcumentatin in the field f crprate incme tax. In the case f a lack f data serving t cnduct an analysis f cmparisn data, the taxpayer shall append t the tax dcumentatin a descriptin f cmpliance f the cnditins f transactins and ther events determined with related subjects with the cnditins determined by and between independent subjects. This dcument was updated in cperatin with MDDP, TPA Glbal Partner, Pland