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Transfer pricing legislative changes 2021


by Bartosz Fuchs and Mateusz Żyła

2 April 2021


It is no longer surprising that taxpayers can expect changes to transfer pricing laws at the start of every year. This year is no different – another set of amendments entered into force on 1 January.

This time, however, the changes are revolutionary. They introduce an obligation to document transactions with independent entities. They also include certain facilitations which improve the situation of taxpayers in connection with the SARS-CoV-2 pandemic.


Additional documentation obligations

The most controversial change is the new obligation to prepare transfer pricing documentation (including a benchmarking study) for transactions in which the beneficial owner is an entity other than the taxpayer's contractor and has its place of residence, registered office or management in the territory or in a country applying harmful tax competition (the so-called tax haven). The threshold for such transactions is 500,000 zloty.

Whenever the taxpayer's contracting party (associated enterprise or independent entity) deals with an entity from a tax haven, it is presumed that the beneficial owner is based in a tax haven. The legislator uses here a very broad wording which covers practically every transaction made with an entity from a tax haven. The taxpayer is exempt from the obligation to prepare transfer pricing documentation for such transactions only if he rebuts this presumption.


Explanations of the Ministry of Finance – when does a taxpayer become obliged to document transactions with a tax haven resident

The above change was introduced both in the CIT Act and in the PIT Act. As the provision is unclear, the Ministry of Finance has decided to publish tax explanatory notes on this issue. Currently, a draft document is available to which tax advisers and taxpayers may submit objections. The document's main drawback is that it is very general and fails to address questions asked by taxpayers and to explain unclear issues.

Also Rödl & Partner will soon file objections to the draft explanatory notes. We will inform you about it in a separate publication.


Documentation of transactions with tax havens

The threshold for transactions that taxpayers have made directly with tax haven residents so far, i.e. 100,000 zloty, has not changed. However, the scope of transactions has been extended to include all transactions with tax havens. Previously, the provision referred only to selected transactions, including payments made to an entity from a tax haven or a partnership or joint venture agreement made with such an entity.

The sections of the local file regarding transactions with tax havens have been extended as well – they should now additionally include the economic justification of the transaction, such as expected economic benefits.


Favourable changes to transfer pricing regulations

Favourable changes introduced in the new regulations are connected with the period of the SARS-CoV-2 pandemic and include:

  • transfer pricing adjustment – taxpayers do not have to hold a statement of the associated enterprise about making the same transfer pricing adjustment in the period or for the period of the pandemic;
  • exemption from the obligation to document transactions between domestic entities – transaction parties who want to use the exemption need not meet the "no loss" requirement if their income is at least 50% lower than in the previous year.



The amendments to transfer pricing regulations show a growing interest of state authorities in business relations between taxpayers and tax havens. Unfortunately, the interpretation chosen by the legislator extends the documentation obligations to cover also transactions with entirely independent contracting parties.

We recommend that you take the following steps to properly fulfil the old and the new transfer pricing obligations:

  • review the existing contracts and documentation and update them so as to be able to demonstrate that you have exercised due care;
  • develop a procedure for screening business partners in terms of transactions with tax haven residents;
  • amend your transfer pricing policy and other internal instructions to take account of the due care procedure.

If you have any questions about the above mentioned changes, you are welcome to contact the Rödl & Partner experts.


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Dominika Tyczka-Szyda

Tax adviser (Poland)


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