We use cookies to personalise the website and offer you the greatest added value. They are, among other purposes, used to analyse visitor usage in order to improve the website for you. By using this website, you agree to their use. Further information can be found in our data privacy statement.

Transfer prices and low value-added services – legislative changes


by Joanna Jurasz and Michał Gosek

12 March 2018


Definition of low-value added services was added to the transfer pricing provisions on 18 July 2013. This amendment is important for Polish taxpayers operating as part of corporate groups, and the new provisions apply from their date of entry into force to all already started matters. The low value-added services have been catalogued and the rules for calculating prices of transactions involving such services have been set out. The new transfer pricing provisions also govern the special procedure for investigating such transactions.


The provisions which entered into force on 18 July 2013 are included in the Regulation of the Minister of Finance of 17 June 2013 amending the Regulation on the method and procedure of determining income of legal persons by way of assessment as well as on the method and procedure for elimination of double taxation of legal persons in the case of correction of gains earned by related parties (the "Regulation").


The changes were made to adjust the domestic regulations to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and to implement the EU Joint Transfer Pricing Forum’s transfer pricing guidelines on low value-added services. At the same time, this is a foretoken of more changes to the transfer pricing coming from the lawmakers.


One of the changes that should attract the attention of most Polish taxpayers operating as part of corporate groups is adding to the provisions the exhaustive definition of low value-added services along with a comprehensive list of such services and the special procedure for investigating them. Polish tax regulations on transfer pricing used to be short of detailed rules on the calculation of prices of transactions involving low value-added services.


The Regulation defines the low-value added services as "services which are routine, ancillary to the core business of the principal, generally or easily available and which do not create significant added value for the principal or the service provider". They include without limitation:

  • IT services;
  • administrative services;
  • HR and payroll support;
  • bookkeeping;
  • HR management (open list of the services is included in Appendix no. 1 to the Regulation).


Along with the low value-added services the Regulation introduced the concept of the shareholder's expenses, that is, expenses incurred by the owner, which should not be considered as related to provision of services because they bring benefits exclusively to the holder of shares. Appendix no. 2 to the Regulation includes the example list of the shareholder's expenses.


The new transfer pricing provisions allow for simplified investigation procedures introduced from 18 July 2013. The precondition is that the taxpayers describe the low value-added services in transactions with a related party. To write such a description it is enough to refer to §22a(3) of the Regulation, which lists the elements that must be included. In the face of the previous, intricate transfer pricing provisions this will be a major benefit for taxpayers.


The legislative changes to the transfer pricing may seem to impose new administrative obligations on taxpayers. But in fact, they may bring measurable benefits. If a taxpayer presents in the course of an investigation a description of low value-added services, the investigators will in the first place check the reasonableness of the transaction involving those services and will make their assessment on the basis of that description. Since the provisions are clear and accurate about which elements are going to be checked by the tax authorities, taxpayers can limit the risk of challenging the terms of transactions between related parties. At the same time, taxpayers may present their case for making the transactions on the terms they have agreed.

Taxpayers may be a bit in doubt about the fact that the new provisions do not include a separate list of methods for calculating transfer prices of low value-added services. §22a(6) of the Regulation says indirectly how such transactions should be priced. It stipulates that the allocation of costs incurred by related parties in connection with low value-added services should be examined in terms of the conditions that unrelated parties would agree. In this context, we may conclude that the transfer prices of low value-added services are to be calculated using the methods referred to in Article 11 of the Corporate Income Tax Act.


The separate treatment of low value-added services relaxes the documentation obligations and should be considered favourable and a step towards adjusting the Polish provisions to European standards. Nevertheless, there will certainly be doubts and questions about the interpretation of the new provisions, which will have to find their answers in advance tax rulings and judgements of administrative courts.


In the context of the new provisions our experts would be glad to scrutinise your transfer pricing documentation to check if the transactions may be classified as purchase/provision of low value-added services. If they may, we would offer our tax advice on adjusting the documentation to the new law. Additionally, we can examine your current transactions to check if they are subject to the new provisions and if you can enjoy simplified investigation procedures. At the same time, we would like you to note that having the description of low value-added services is a right, not an obligation, of taxpayers. In practical terms, however, it may simplify and shorten the tax inspection.


Contact Person Picture

Dominika Tyczka-Szyda

Tax adviser (Poland)


Send inquiry


Deutschland Weltweit Search Menu