On 10 July 2020 Director of National Treasury Information issued an individual interpretation (ref. 0111-KDIB1-2.4010.210.2020.1.AW) to determine whether Article 11n(5) of the Corporate Income Tax Act excluding the obligation to prepare transfer pricing documentation will apply in a Company whose sole shareholder is a State Enterprise, and which is not exclusively affiliated with the State Treasury.

The applicant provides services in the field of security control, subject to the provisions of the Act of 16 December 2016 on the principles of state property management (i.e. Journal of Laws of 2020, item 735, as amended).

The only shareholder of the Applicant is the State Enterprise. The founding body of the State Enterprise is the Minister. The Applicant was established in 2008 on the basis of the prior consent of the Minister issued at the request of the State Enterprise.

According to Article 1 of the Act of 25 September 1981 on State Enterprises (i.e. Journal of Laws of 2017, item 2152 as amended), a State Enterprise is an independent, self-governing and self-financing entrepreneur with legal personality. In the light of Article 7(1)(1) of the said Act, state-owned enterprises are constituted by chief and central bodies of state administration, called in further provisions of the Act the founding bodies.

State enterprise (state legal person) holds 100% of shares of the Applicant, 100% of shares of W. Sp. z o.o. and 45.65% of shares of P. Sp. z o.o.; the remaining 54.35% of shares of P. Sp. z o.o. are held by the Voivodeship.

Between the Applicant and the State Enterprise and two other entities indirectly related to the Applicant (W. Sp. z o.o. and P. Sp. z o.o.) there were in 2019 controlled transactions exceeding the documentation thresholds specified in Article 11k(2) of the Corporate Income Tax Act obliging taxpayers to prepare transfer pricing documentation.

Pursuant to Art. 11n(5) of the Corporate Income Tax Act, the obligation to prepare local transfer pricing documentation does not apply to controlled transactions if the links result exclusively from an association with the State Treasury or local government units or their associations.

In the described facts, the only entity that can demonstrate an exclusive relationship with the State Treasury is the State Enterprise.

The applicant, being a commercial law company of which the State Enterprise is a shareholder, is not only affiliated with the State Treasury, but with the State Enterprise.

Therefore, the Applicant cannot benefit from the exemption from the obligation to prepare transfer pricing documentation.


Author: Beata Rawa – Transfer Pricing Manager