Worldwide transfer pricing reference guide 2014

Poland (continued)
Transfer pricing penalties
If the taxpayer does not provide transfer pricing documentation at the request of the Polish tax authorities and within a specified time, a
50% penalty tax rate is applied for any additional income assessed by the tax authorities, instead of the standard tax rates that generally
apply. Moreover, the taxpayer will be required to pay interest on tax arrears and fiscal penalties resulting from Fiscal Penal Code as well
as may face personal responsibility based on Commercial Code.
Penalty relief
If the taxpayer provides the required transfer pricing documentation on time as specified by the tax authorities (i.e., within seven days of
the date of a request), the penalty rate for income assessed can be reduced to the normal tax rate.
Documentation requirements
Taxpayers carrying out transactions in excess of certain amounts, with related parties and permanent establishments of foreign
companies functioning in Poland, as defined in the Polish CIT and PIT Acts, are required to prepare transfer pricing documentation.
The amounts referred to above are where the total transaction amount in a tax year exceeds the following limits:
• EUR100,000 if the transaction value does not exceed 20% of the share capital
• EUR30,000 if the transaction refers to services or intangibles
• EUR50,000 for other types of transaction between related entities
Taxpayers carrying out transactions, in which payments are made directly or indirectly to an entity in a territory or country recognized
as a tax haven, are obliged to prepare tax documentation for such transactions when the total transaction amount in a tax year exceeds
EUR20,000.
As there is no specific form required for transfer pricing documentation, the CIT and PIT regulations instead determine the nature of the
documentation. The statutory transfer pricing documentation should cover at least the following elements:
• Functions performed by the parties to the transaction (with the consideration of assets employed and risks borne)
• Expected transactional costs and the method and payment due dates
• Method and manner of calculating profits and the transaction value
• Business strategy, if it influenced the transaction value
• Other factors influencing the transaction value
• Expected benefits from intangible performances or services — this element applies only to the purchase of intangibles or services
These elements are mandatory, so if the documentation does contain all of them, the tax authorities may disregard the documentation.
In addition, taxpayers are obliged to prepare statutory Polish transfer pricing documentation and provide to the Polish tax authorities at
their request.
Moreover, according to the amended Decrees, tax authorities should first examine low value adding services by reference to the
documents the taxpayer has provided. The taxpayer may additionally prepare the documentation which should include in particular:
• A description of the type of services together with the reason justifying the classification of the service as a low value adding service
• Confirmation that a given service has been provided and information showing that its acquisition was reasonable, including a description
of the service acquirer’s benefits
• A description of and a justification for the provision of services
• A list, description and analysis of the related parties’ expenses arising from the service
• A list of shareholder expenses
• A description of the cost sharing key
• A list of services available on demand
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