The Polish decrees (dated 3 July 2013) reflect measures contained in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and conclusions from the EU Joint Transfer Pricing forum in the area of low value-adding services.
The effective date of the decrees is 18 July 2013.
New rules, definitions
Poland’s decrees implement new rules concerning:
- “Business restructuring” - defined as any transfer of important functions, assets, and risks between related parties
- “Low value-adding services” - defined as routine services supporting the activities of the service recipient and not generating significant value (e.g., administrative services, technical support, financial and management services)
Transfer pricing method
The new decrees further implement a rule that the tax authorities may select a relevant transfer pricing method on the basis of selection criteria pursuant to the OECD guidelines.
With these changes, the tax authorities’ prior position favoring the uncontrolled price method as the preferred transfer pricing method no longer applies.
The decrees define comparability analysis as an examination for the compliance of terms concluded or imposed between related entities, with terms that would have been agreed to by independent entities under comparable circumstances.
The decrees specify steps and evaluations that taxpayers need to take in conducting a comparability analysis—e.g., evaluating the character of the subject transaction, conducting functional analysis, examining terms contained in an agreement of other document, and considering economic conditions and business strategies of the parties to the transaction.
The decrees also contain a list of stages at which such analysis is to be completed.
The decrees allow for multiple-party dispute resolution proceedings, in order to avoid double taxation when three countries are involved.
Read a 2013 report [PDF170 KB] prepared by the KPMG member firm in Poland: New Transfer Pricing Decrees