On 29 June 2018. The director of the National Tax Information Office, in his individual interpretation 0114-KDIP2-2.4010.135.2018.1.AZ referred to the obligation to prepare tax documentation between the Capital Group and the Tax Group in which the State Treasury is a shareholder.
According to the facts, the parent company of the Tax Capital Group is the Company listed on the Warsaw Stock Exchange, where the State Treasury holds a majority stake in the capital. The State Treasury is the highest level parent company in the Capital Group, and at the same time the Company is the parent company in the Capital Group holding a direct or indirect capital share in subsidiaries, jointly controlled entities and associates. The State Treasury holds a direct capital share in the Company and an indirect capital share in the other companies of the Capital Group. The nature of the relationship with the State Treasury is realized through capital and personal relationships.
Companies belonging to the Tax Group enter into transactions with related parties not belonging to the Tax Group but belonging to the Capital Group of the Company. According to the Company, the Tax Capital Group to which it belongs is exempt from the obligation to prepare transfer pricing documentation for transactions concluded between companies forming the Tax Capital Group and domestic entities of the Capital Group, which do not belong to the Tax Capital Group, as affiliated entities by the State Treasury.
The Director of National Revenue Information found the Applicant’s position incorrect.
In the opinion of the Director of the National Tax Information, related entities from outside the Tax Capital Group forming the Capital Group are related entities, which means that there is an obligation to prepare tax documentation for the Tax Capital Group. In the case of transactions concluded between companies forming the Tax Capital Group and domestic entities of the Capital Group. Exemptions from the obligation to prepare tax documentation may apply to entities which are related only to each other through the State Treasury. The parallel occurrence of premises other than those of the State Treasury or a local government unit makes the exclusion of the application of Article 11(4) of CIT inapplicable.
In the opinion of ICT, the fact that the State Treasury holds the indicated shares constitutes a premise excluding the fact of the relationship, at the same time it does not exclude the existence of other prerequisites imposing the obligation to prepare transfer pricing documentation. The facts in question are as follows from the Tax Capital Group and entities from the Capital Group are not only related by the State Treasury, but are also related to each other, which means that the exemption from the obligation to prepare transfer pricing documentation referred to in Article 11(4) of the CIT Act cannot be applied to transactions with the Tax Capital Group.
Author: Beata Rawa ? Senior tax consultant
