On 3 February 2020 Director of National Treasury Information issued an individual interpretation (ref. 0114-KDIP2-2.4010.509.2019.1.SJ) on the obligation to prepare transfer pricing documentation by an independent public health care institution for transactions with a public university.
The applicant is a therapeutic entity not being an entrepreneur, operating as an independent public health care institution.
The entity forming the Applicant within the meaning of art. 2 sec. 1 point 6 of the Act on Medical Activity is a public higher school, having legal personality.
According to art. 6 section 6 of the Act on Medical Activity, a medical university may establish and run a medical entity in the form of an independent public health care institution or a capital company.
In the facts described below, the transactions indicated exceed the documentation thresholds referred to in Article 11k, section 2 of the Act on Corporate Income Tax:
- providing a medical higher education institution with organisational units necessary to provide pre-university and postgraduate programmes in medical professions by medical entities established or operated by the institution, together with the related obligation of the institution to provide funds for the performance of teaching and research tasks; the assets shall be made available on the basis of a loan agreement (without remuneration),
- transferring funds for adaptation of the entrusted organisational units necessary to conduct training in medical professions (including rooms intended for teaching, scientific research and development works),
3 Surety for liabilities under loans granted.
As indicated in Article 11n of the Corporate Income Tax Act, the obligation to prepare local transfer pricing documentation does not apply to controlled transactions:
1) 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 all of 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;
- covered by a prior price agreement during the period covered by that agreement.
- whose value does not constitute revenue or tax deductible cost in its entirety on a permanent basis, except for financial transactions, capital transactions and transactions concerning investments, fixed assets or intangible assets.
4) Between companies forming a tax capital group.
5) Where the links result exclusively from a link with the State Treasury or local government units or their associations.
(6) In which the price was determined in an open tender procedure pursuant to the Act of 29 January 2004. – Public Procurement Law (Journal of Laws of 2018, Items 1986 and 2215 and 2019, Item 53).
- carried out between a group of agricultural producers entered in the register referred to in Article 9(1) of the Act of 15 September 2000 on Agricultural Producer Groups and their Relationships and Amendments to Other Acts (Journal of Laws of 2018, item 1026), and its members, concerning paid disposal:
- to a group of agricultural producers of products or groups of products produced in the farms of members of such a group,
- by the agricultural producer group to its members, the goods used by the member for the production of the products or groups of products referred to in point (a) and the provision of services related to that production.
- carried out between a fruit and vegetable producer group or a recognized fruit and vegetable producer organization, acting on the basis of the Act of 19 December 2003 on the organization of markets in fruit and vegetables and the market in hops (Journal of Laws of 2018, items 1131 and 1633), and its members, concerning disposal against payment:
- for the benefit of such a group or organization of products or groups of products produced on the farms of members of such a group or organization,
- by such a group or organisation to its members the goods used by the member in the production of the products or groups of products referred to in point (a) and the provision of services related to that production.
(9) consisting in the attribution of income to a foreign establishment situated in the territory of the Republic of Poland by the taxable persons referred to in Article 3(2), if the provisions of the relevant international agreements to which the Republic of Poland is a party provide that such income may be taxed only in a State other than the Republic of Poland.
In accordance with the position of the Director of the National Treasury Information, the Legislator in the aforementioned.
In accordance with the position of the Director of National Treasury Information, the legislator did not provide for an exemption for entities whose activities are based on laws and serve to carry out tasks in the field of public health protection.
Thus, DKIS confirmed the necessity to document transactions between an independent public health care institution and a public university.
At the same time, the documentation obligation is the transaction of surety for liabilities under granted loans (transaction no. 3). Transactions marked under no. 1 and 2 according to DKIS are not subject to the obligation to prepare transfer pricing documentation because they were considered to be activities performed in order to perform the tasks imposed by the Act on Medical Activity, without economic character.
Autor: Beata Rawa ? Transfer Pricing Manager