On 15 May 2020 the Director of the National Revenue Administration issued an individual interpretation (ref. 0111-KDIB1-2.4010.81.2020.2.MS) to determine whether a cash contribution is subject to the obligation to prepare transfer pricing documentation.

In the described facts, the only shareholder of the Applicant (holding 100% of the Applicant’s shares) is a company having its registered office in Slovakia.

The company having its registered office in Slovakia (Company X) plans to increase the capital of the Applicant. The contribution made by Company X will take the form of a cash contribution. Its amount will be EUR 5,000,000.00. The contribution in question will be allocated in part to the share capital of the Applicant and in part to its supplementary capital (agio).

The above transaction is presented in the diagram below.

Figure 1: Transaction between entity X and Y

Pursuant to Article 11k(2) of the Corporate Income Tax Act, local transfer pricing documentation is prepared for a controlled transaction of a homogeneous nature, whose value, less VAT, exceeds the following documentation thresholds in the financial year:

  1. PLN 10 000 000 – in case of a commodity transaction;
  2. PLN 10,000,000 – in case of a financial transaction;
  3. PLN 2,000,000 – in case of a service transaction;
  4. PLN 2,000,000 – in case of a transaction other than specified in items 1-3.

In the opinion of the Applicant, as well as the tax authority, the transaction of making a cash contribution should be qualified to a transaction other than those specified in points 1-3) above. Therefore, the Applicant will be obliged to prepare local transfer pricing documentation for the transaction in question.


Author: Beata Rawa – Transfer Pricing Manager