Commencing on 1st January 2017, the scope of obligations of the Polish taxpayers regarding reporting and documenting transactions with related parties will be subject to a significant modification and extension.
The main changes to be introduced starting from 2017, include:
- the changed definition of a related entity:
Under the new definition the threshold of the minimum shareholding triggering the requirement to prepare the TP documentation will be increased to 25%.
- the changed scope of events requiring preparation of TP documentation
Under the new regulations, the TP documentation should cover not only transactions with related parties but also other events recorded in the taxpayer’s books which conditions were agreed with or imposed by a related entity. Transactions or other events trigger the obligation to prepare TP documentation if they have a significant impact on the income (or loss) reported by the taxpayer (the test is applied based on the turnover of the taxpayer and value of the transaction or other event).
- differentiation of the reporting and documenting requirements due to the turnover or costs reported by the taxpayer
Under the new regulations, only taxpayers reporting turnover or costs exceeding EUR 2,000,000 per year will be obliged to prepare transfer pricing documentation.
The taxpayers who reported turnover or costs exceeding EUR 10,000,000 will be obliged to prepare a comparability analysis (which so far was only a facultative element of TP documentation) and to file a simplified report on the transactions and other events with involvement of the related entities. The comparability analysis should be updated at least every three years.
The taxpayer who reported turnover or costs exceeding EUR 20,000,000 will be obliged to prepare a so called master file (containing data regarding the group).
Additionally, the biggest taxpayers (taxpayers that reported consolidated turnover exceeding EUR 750,000,000) will be obliged to country-by-country reporting (reporting income and tax paid by each entity of the group). The obligation of the country-by-country reporting will apply to the results generated in 2016.
- deadline for preparation of TP documentation
The taxpayer will still be obliged to provide the tax authorities with TP documentation within 7 day deadline commencing on the receipt of the relevant request. However, the deadline for preparation of TP documentation for a given tax year is the day of submitting the annual income tax return for such year. When filing the annual income tax return, the members of the management board of a taxpayer will be obliged to confirm that the TP documentation has been prepared by the taxpayer.