On 17 March 2020 Director of National Revenue Information issued an individual interpretation (ref. 0111-KDIB1-2.4010.23.2020.1.MS) concerning the existence of links under the provisions on transfer prices between a university and a hospital for which the university is the founding entity.

The University (the Applicant) is a public medical university. Act of 15 April 2011 on Medical Activity, pursuant to which a medical university may establish and operate a medical entity as an independent public healthcare institution, the University has established three university hospitals in the form of independent public healthcare institutions. Each of the hospitals has legal personality.

According to the content of the Act of April 15, 2011 on Medical Activity, the manager is responsible for the management of a therapeutic entity that is not an entrepreneur. It follows from the aforementioned Act that in the case of therapeutic entities which are not entrepreneurs, the creating entity enters into an employment relationship with the manager by virtue of an appointment or employment contract or enters into a civil law contract with him/her. Moreover, the creating entity announces a competition for the position of a manager. The creating entity also appoints a social council. A social council is an initiating and opinion-forming body of the creating entity and an advisory body of the manager.

As it results from the above, the creating entity, which is the Applicant, influences the management of hospitals by appointing a manager (signing with him/her an employment contract or other contract of employment), appointing and dismissing the social council, which is the initiating and advisory body of the creating entity and advising the manager.

Pursuant to this Act, hospitals shall be obliged to provide a medical higher education institution with the organisational units necessary to provide pre-university and postgraduate education in the medical professions, and a medical higher education institution shall be obliged to provide funds for the performance of teaching and research tasks in return.

In the opinion of the tax authority, a higher education institution shall have an effective capacity to influence key business decisions taken by hospitals within the meaning of Article 11a, section 1, subsection 4(a) of the Act on Corporate Income Tax, and the definition of “participation in management and control” shall also be fulfilled. It should be recognised that the University and the Hospital for which the University is an entity are related on the basis of transfer pricing regulations.

Author: Beata Rawa – Transfer Pricing Manager