The Polish Deal: Changes in transfer pricing

The Ministry of Finance is working on another revision of the Polish Deal to amend, among other things, provisions on the obligation to document transactions with tax havens. 

The draft legislation: 

In the case of domestic transactions, i.e. where both the payer and the payee are subject to domestic jurisdiction, only the payee will have to document the indirect transactions with tax havens. And only the payee will have to check the transaction for the existence of a beneficial owner in a tax haven or for payments to or from a tax haven. 

According to current legislation, if the taxpayer's business partner (the other party to the transaction) makes payments to a tax haven, it is presumed that the beneficial owner is in the tax haven. The draft exempts entities making indirect transactions with tax havens from the documentation obligation if the payee: 

A payee's statement saying that it is the beneficial owner of the payment, and if it is not – whether the beneficial owner is a tax haven entity, is sufficient to verify the documentation obligation. 

 

It will be allowed to apply the new transfer pricing rules retroactively, i.e. to transactions started and not completed before 1 January 2021 or started after 31 December 2020. 

If you have any questions about documentation obligations related to transactions with tax haven entities, you are welcome to contact our experts.