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Transfer pricing in the context of coronavirus



Due to the outbreak of COVID-19, we draw your attention to transfer pricing problems caused by the epidemic as well as the risk areas and possible solutions. We can check for you the following problems and suggest how best to solve them.



Analysis of how coronavirus affects the terms and conditions of transactions between associated enterprises


1. Agreements regulating intercompany transactions


  • review of intercompany agreements and (if applicable) renegotiation of those agreements to take account of changes in the terms and conditions of transactions or the entire supply chain and the related consequences;
  • review of agreements in terms of risks to be taken by each of the transaction parties and thus in terms of whether coronavirus will affect their business;
  • review in terms of how failure to keep the terms and conditions of an intra-group agreement may affect transfer pricing – assessment of the risk of contractual penalties.

2. Settlement of intercompany accounts 
• checking whether the transfer pricing model, including the intra-group supply chains, can be changed so as to take account of the impact of the economic slowdown and the group’s losses – assessment whether the changed model is at arm’s length within the entire group and is justified;

• the risk that coronavirus will affect entities performing routine functions, i.e. limited-function manufacturers and distributors:

  • the risk that tax authorities will challenge the decrease in profits of entities performing routine functions (contract manufacturers, distributors performing routine tasks in Poland) whose profit has been based so far on a fixed or relatively low margin – review of the transactional terms, including without limitation, the coverage of fixed operating costs or adjustment of profits to the arm’s length level at the end of the year;
  • checking the option and consequences of compensating contract manufacturers for downtime / plant closure;

• checking the option to offset transactional losses for a given year against future transactional profits.

3. Transfer pricing reporting obligations 2020

  • checking if the benchmarking study for 2020 can be updated due to significant changes in the business environment – assessment of the risk that new studies will have to be conducted for 2020 due to such changes (even though a benchmarking study report is valid 3 years);
  • benchmarking study for 2020 – assessment of the risk that entities that incurred a loss are exposed to due to disclosing a profitability level lower than the arm's length range based on the 2017-2019 or earlier data, plus the relevant recommendations (if applicable);
  • checking if the impact of the slowdown caused by coronavirus must be considered and described in the transfer pricing documentation for 2020, plus the relevant recommendations (if applicable);
  • filing a TP-R report for 2020 if the company suffers losses – assessment of the risk that tax authorities will challenge the arm’s length nature of transactions which have generated a loss or whose profitability is below the arm's length range determined based on the 2017-2019 or earlier data, plus the relevant recommendations (if applicable).



Analysis of how the economic slowdown caused by SARS-CoV-2 affects, or may affect, the APA procedure. This includes checking the following risks


  • The APA issuing procedure will be longer for pending or future applications.
  • The transfer pricing model will be changed during the APA issuing procedure and, consequently, either no APA will be issued or the APA procedure will last longer.
  • The profits of entities which have applied/will apply for APA will drop and thus no APA can be issued to routine entities which suffer losses; this translates into the risk that the group’s costs subject to the limitation under Article 15e CIT Act will not be tax-deductible.
  • The risk that the decision on issuing the APA to routine entities (manufacturers and distributors) will expire, be lifted or amended due to the change in the margin or the supply chain and the course of the transactions covered by the APA.



Please contact our tax advisers, who will be happy to answer all your questions regarding transfer pricing.


Contact Person Picture

Dominika Tyczka-Szyda

Tax adviser (Poland)


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