Change of margins and interest rates under the safe harbour laws

by Piotr Ziółkowski

28 January 2022

1 January 2022 was the effective date of the Announcement of the Minister of Finance of 21 December 2021 concerning the type of the base rate and the margin used for transfer pricing purposes in the area of income tax.
 
The announcement specifies the type of the base rate and the margin rate to be used to set interest rates of intragroup loans and borrowings and bond emissions. This is one of the conditions for enjoying the transfer pricing safe harbour provision.
 
With the view to make the safe harbour mechanism more flexible – taking into account the COVID-19 pandemic and its adverse effects on the Polish economy – a change in the margin rate has been proposed as part of the safe harbour provisions regulating loans and borrowings and bond emissions. The proposed maximum margin rate for borrowers is 2.80 percentage points, whereas the minimum margin rate for lenders is to remain at 2.00 percentage points.
 
The published announcement provides for the following base rates:

• WIBOR 3M for loans granted in Polish zloty;
• SOFR 3M Compound Rate (or LIBOR USD 3M if a loan was granted before 1 January 2022) – for loans granted in U.S. dollar;
• WIBOR 3M for loans granted in euro;
• SARON 3M Compound Rate for loans granted in Swiss franc;
• SONIA 3M Compound Rate (or LIBOR GBP 3M if a loan was granted before 1 January 2022) – for loans granted in pound sterling.

 
When making new financial transactions with associated enterprises it is worth checking their interest rate in the context of the changes introduced by the announcement.

 If you have any questions or doubts regarding safe harbours, do not hesitate to contact the Rödl & Partner experts.