Preparation of transfer pricing tax documentation is a formal and legal obligation resulting from the provisions of the tax law.

It applies to transactions between related entities or having their registered office or management in the territory or in a country applying harmful tax competition (tax havens), the value of which exceeds the limits specified in the acts.

Why is it worth preparing tax documentation?

Having the optimal version of the transfer pricing tax documentation secures the documentation obligation and minimizes:

  • the risk of estimating income and questioning tax deductible costs
  • the risk of receiving a fine of up to 720 daily rates
  • the risk of receiving additional tax sanctions of up to 30% on an unduly shown or overstated loss resulting from the use of incorrect transfer pricing
  • the risk of imposing tax interest
  • criminal risk for persons who are members of the management board or perform managerial functions

The ongoing preparation of transfer pricing documentation allows you to:

  • increasing the tax security of transactions and reducing risks
  • collecting evidence confirming the market nature of the transaction
  • presentation of all circumstances affecting the conclusion of the transaction and the amount of remuneration
  • fulfillment of additional requirements provided for by law

The content of transfer pricing tax documentation

Tax documentation is a collection of information about the transaction. It describes the subject and role of the transaction entities, the implemented strategy and the method of setting the price. It must take into account the following elements:

  • defining the functions to be performed by the entities participating in the transaction (taking into account the assets used and the risk taken),
  • determination of all expected costs related to the transaction as well as the form and date of payment,
  • the method and manner of profit calculation and determination of the price of the subject of the transaction,
  • defining the economic strategy and other activities within its framework – if the value of the transaction was influenced by the strategy adopted by the entity,
  • indication of other factors – if these other factors were taken into account in order to determine the value of the subject of the transaction by the entities participating in the transaction,
  • specification of the expected benefits related to obtaining benefits – applies to contracts covering benefits (including services) of an intangible nature.