On 24 July this year. Director of National Treasury Information issued an individual interpretation (ref. 0111-KDWB.4010.7.2020.1.KK) to determine whether there will be an obligation to provide information on transfer prices for those transactions that meet the conditions provided in Article 11n(1) of the Corporate Income Tax Act in terms of exemptions for domestic transactions, while the transaction values do not exceed the transaction thresholds.
Pursuant to Article 11n(1) of the Corporate Income Tax Act, the obligation to prepare local transfer pricing documentation does not apply to controlled transactions concluded exclusively by affiliates having their residence, registered office or management on the territory of the Republic of Poland in the tax year in which each of these affiliates meets jointly the following conditions:
- does not benefit from the exemption referred to in Article 6,
- does not benefit from the exemption referred to in Article 17(1)(34) and (34a),
- has not suffered a tax loss.
Both the Applicant and entities related to the Applicant meet the above conditions.
At the same time, transactions with related entities do not exceed the thresholds referred to in art. 11k section 2 of the Corporate Income Tax Act. In accordance with the above mentioned article, the local file documentation prepared for a controlled transaction of homogeneous nature, whose value, reduced by the tax on goods and services, exceeds the following documentation thresholds in a financial year:
- PLN 10 000 000 – in case of a commodity transaction,
- PLN 10 000 000 – in case of a financial transaction,
- PLN 2 000 000 – in the case of a service transaction,
- PLN 2,000,000 – in the case of a transaction other than those specified in points 1-3.
In the opinion of the Applicant, affiliated entities carrying out domestic transactions whose value (considered from the perspective of controlled transactions of homogeneous nature) does not exceed the amount thresholds indicated in Article 11k(2) of the Corporate Income Tax Act, are not obliged to submit information on transfer prices.
The above position has been additionally confirmed in the individual interpretation of the Director of National Treasury Information of 27 March 2020. (ref. 0114-KDIP2-2.4010.60.2020.1.SJ).
Author: Beata Rawa – Transfer Pricing Manager