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APA application procedure – step by step


by Radosław Ozimek, Łukasz Szczygieł

8 July 2020 


Taxpayers are increasingly interested in Advanced Pricing Agreements (APA). The application procedure for an APA consists of several stages – you have to submit an application containing specific requirements and usually talk to representatives of the National Tax Administration at a preliminary meeting. The whole procedure ends with an administrative decision which confirms the transaction's compliance with the arm’s length principle. In this article we elaborate on the whole APA application procedure, the specific parts of a complete application and the application fees.

The successful application for an APA at the domestic level only, without involving foreign institutions, results in a unilateral agreement. It confirms the transaction's compliance with the arm's length principle from the point of view of Polish tax authorities only. If the procedure involves foreign authorities, you can end up with a bilateral or multilateral agreement which confirms the arm’s length nature of the transaction terms also from the perspective of foreign tax authorities which are involved in the proceedings. Additionally, a bilateral or multilateral agreement brings benefits of an APA to all entities covered by the agreement.

What is the preliminary meeting about

Any entity interested in an Advanced Pricing Agreement may ask the Head of the National Tax Administration, and more specifically the Secretary of the Key Accounts Department, to hold a preliminary meeting before submitting an application. It is usually held as a teleconference, but in-person meetings are possible as well. The meeting aims at clarifying doubts about the APA procedure, mainly the scope of required information and the anticipated closing date of the procedure. The meeting also serves to set the scope of the agreement, i.e. the nature of the transaction to be covered by the agreement. The APA covers a controlled transaction as defined in income tax legislations, that is, in the same way it is defined for transfer pricing documentation purposes. Therefore, the homogeneity of the controlled transaction is relevant also for an APA application and it should be clarified as much as possible at the preliminary meeting. For instance, sale of goods on different commercial terms and on different INCOTERMS to a number of different entities may be regarded as a homogeneous transaction.

To clarify the above issues, you have to prepare the relevant materials. To be able to hold the preliminary meeting, the applicant should deliver information about, among other things, the nature of the transaction and his business activity, and ask his questions about the APA procedure, at least 5 working days before the scheduled date of the meeting.

What is included in the APA application form

After holding the preliminary meeting and resolving the most important issues about the APA procedure, the applicant submits his APA application to the Head of the National Tax Administration and thus starts the formal administrative procedure. Article 90 of the Act on Resolving Double Taxation Disputes and Concluding Advance Pricing Agreements describes in detail what the APA application should include, breaking it down into groups of required information:


  1. details of the applicant and its associated enterprises taking part in the controlled transaction;
  2. details of the controlled transaction to be covered by the APA decision;
  3. term of the APA;
  4. whether the application is for a unilateral, bilateral or multilateral agreement;
  5. whether foreign associated enterprises have applied for the agreements to foreign tax authorities if the application is for a bilateral or multilateral agreement.

The first and the second group of the required components of the APA application essentially repeat the content of the Local File. As regards the first group, the additional item compared to the TP documentation is the description of the applied accounting principles. However, it is not a mandatory component of the application – the applied accounting principles must affect the presentation of transactions in order to be mandatory. The group of information about the controlled transaction, like in the TP documentation, contains a description of the nature and type of the transaction plus a functional analysis describing the functions performed, assets used and risks incurred. This group includes also the most important components of the application – those concerning the pricing and comparison of the price in the controlled transaction. Like in the TP documentation, you should name the transfer pricing method and carry out a benchmarking study or a compliance analysis referred to in transfer pricing regulations. Additional components of the APA application are the critical assumptions for the selection of the transfer pricing method as being the best one. It is a description of factors underlying the selection of the method plus information on how changes to those factors could affect the pricing result.

If you compare the mandatory components of an APA application and a Local File, you can see that some components of the application are supplementary while some components that are mandatory in the TP documentation do not have to be included in the application. Therefore, the complete APA application does not require much more effort from the applicant than the drawing up of the transfer pricing documentation.

How much does it cost to get an APA

The application for an APA entails a fee which should be paid to the National Tax Administration’s account within 7 days of the application submission. The fee amounts to 1% of the controlled transaction value described in the application. However, the lawmakers have set limits on the fees depending on the type of agreement:


  • from PLN 5 to PLN 50 thousand – for unilateral agreements involving exclusively domestic associated enterprises;
  • from PLN 20 to PLN 100 thousand – for unilateral agreements involving a foreign associated enterprise;
  • from PLN 50 to 200 thousand – for bilateral and multilateral agreements.

If you wonder if it makes sense to apply for an APA, you should consider the application fee in the context of the benefits an APA brings. This will boil down to calculating how much you will earn on deducting the expenses referred to in Article 15e of the CIT Act which would be limited without an APA. Moreover, if you make an APA, you may be more certain that tax authorities will not challenge your prices of transactions with associated enterprises.


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Joanna Tomczak

Tax adviser (Poland)

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