Worldwide transfer pricing reference guide 2014

Poland (continued)
Frequency of tax audit and transfer pricing scrutiny by the tax authority (continued)
The likelihood that, if transfer pricing is reviewed as part of the audit, the transfer pricing methodology being challenged is high. The tax
authorities usually engage in a dedicated transfer pricing audit if they notice irregularities in intercompany settlements or believe that
the financial result is biased by transfer pricing. In such cases, they often challenge the transfer pricing methodology applied.
Although the acceptance of the OECD Guidelines and international practices has increased, the local approach tends to prevail during tax
audits. Local benchmarks are preferred over pan-European ones. The pricing information from cross-controls in the industry is used for
benchmarking.
The compliance regime is still rigorous in Poland. Court rulings focus mainly on legal rather than economic issues. The most frequently
audited types of transactions are limited risk structures, such as limited risk distributors or contract manufacturers, intangible services
(including cost-sharing arrangements), financial transactions and more recently business restructurings.
APA opportunity
The APA regulations came into force on 1 January 2006. The APA procedures are described in Articles 20a–20r of the
Tax Ordinance Act.
An APA concluded for a particular transaction is binding on the tax authorities with regard to the method selected by the taxpayer.
APAs in Poland may apply to transactions that have not yet been executed or transactions that are in progress at the time the taxpayer
submits an application for an APA. Under the Polish rules, three types of APAs are available:
• Unilateral: This type of an APA is defined in the Tax Ordinance Act as an agreement on the method of setting transfer prices between:
• Two related domestic entities — those without foreign capital links
• A domestic entity and its related foreign party
• A domestic entity related to a foreign entity and another domestic entity related to the same foreign entity
• Bilateral: This is an agreement concerning cross-border transactions which can be given by the Polish Ministry of Finance upon the
request of a domestic entity, but only after consultations and upon obtaining consent issued by the tax authorities of the related
foreign entity
• Multilateral: If the agreement concerns a transaction concluded by a domestic entity with foreign entities from more than one country, in
order to conclude such an agreement, the consents of all foreign entities’ tax authorities are required
There are no transaction value limits to be covered by the APAs. In order to submit an application for an APA, the taxpayer must pay a
fee, usually 1% of the transaction value. However, the Tax Ordinance Act sets the following fee limits:
• Unilateral APA — fee cannot be less than PLN5,000 and cannot exceed PLN50,000
• Unilateral APA concerning a foreign entity — fee cannot be less than PLN20,000 and cannot exceed PLN100,000
• Bilateral or multilateral APA — fee cannot be less than PLN50,000 and cannot exceed PLN200,000
The mandatory elements of an APA application are:
• The suggested method for determining prices and an indication of the pricing method recognized by the tax authorities
• A description of the manner of application of the suggested method, with an indication of the principles for price calculation, forecasts
and analyses on which the calculation is based
• A description of the circumstances which may affect the prices
• The documents which may determine the transaction price (agreements, arrangements and other documents indicating the intentions of
the parties to the transaction)
• The suggested length of the APA arrangement
• A list of entities with whom the transaction will be concluded, including their agreement to submit to the taxing authorities all documents
and provide necessary explanations with regard to the relevant transaction. The application must be submitted in Polish language
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