Transfer pricing documentation, service

Professional transfer pricing documentation for your company

Preparing transfer pricing documentation is a formal legal obligation arising from tax law. It applies to transactions between related parties or parties established in tax havens whose value exceeds the limits set out in the acts.

Benefits of preparing transfer pricing documentation:

Having optimal transfer pricing documentation secures the documentation obligation and minimises:

The risk of income being estimated and tax-deductible costs being challenged.
The risk of a fine of up to 720 daily rates.
The risk of additional tax sanctions of up to 30 per cent of a loss wrongly reported or overstated.
The risk of tax interest being charged.
Criminal risk for members of the management board or persons performing managerial functions.

Preparing transfer pricing documentation on an ongoing basis allows you to:

Increase the tax security of transactions and limit risks.
Collect evidence confirming the arm's length character of the transaction.
Present the circumstances that influenced the conclusion of the transaction and the level of remuneration.
Meet the statutory requirements for documentation.

Contents of transfer pricing documentation:

Transfer pricing documentation is a body of information about transactions covering a description of the subject matter and of the role of the parties, the strategy pursued and the way the price is set. It must contain the following elements:

A definition of the functions of the entities taking part in the transaction, taking into account the assets used and the risks assumed.
A statement of the costs connected with the transaction and of the form and date of payment.
The method and manner of calculating profits and of setting the price of the subject of the transaction.
The business strategy and its effect on the value of the transaction.
Other factors taken into account when determining the value of the subject of the transaction.
The expected benefits connected with receiving the performance, including intangible services.

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Frequently asked questions

Who is required to prepare local transfer pricing documentation?

The obligation arises once the thresholds set separately for each homogeneous controlled transaction are exceeded: PLN 10 million for transactions in goods and financial transactions, and PLN 2 million for service and other transactions. For transactions with entities from so-called tax havens the thresholds are lower and amount to PLN 2.5 million for financial transactions and PLN 500,000 for the remainder.

What is the deadline for preparing the documentation and filing the TPR return?

Local transfer pricing documentation is prepared by the end of the tenth month after the end of the tax year. The TPR transfer pricing return is filed by the end of the eleventh month, and the master file, where required, is prepared by the end of the twelfth month after the end of the tax year.

Does an exemption from documentation mean there are no obligations at all?

No. The exemption for domestic transactions concerns the obligation to prepare local documentation and requires the statutory conditions to be met, including the absence of a tax loss and of the exemptions indicated in the act. A transaction covered by this exemption still has to be reported in the TPR return.

What are the consequences of not having transfer pricing documentation?

The authority may determine income at an arm's length level and impose the additional tax liability provided for in the Tax Ordinance. Irrespective of this, the absence of documentation or the filing of an untrue TPR return is an offence punishable by a fine under the Fiscal Penal Code.

Does documentation have to be prepared from scratch every year?

Local documentation is prepared for every tax year in which the thresholds were exceeded. A benchmarking study or compliance analysis has to be updated at least once every three years, unless the economic environment has changed earlier to an extent that materially affects its outcome.