Transfer Pricing December deadline for TPR-C / expiration of 2017 benchmarks

The deadline for sending TPR-C (information on transfer pricing) to the tax administration expires by the end of December. The period of validity of benchmarks (comparative analyzes) prepared for the purposes of TP's documentation for 2017 has also expired.

Reporting obligation regarding transfer pricing - TPR-C

As a rule, taxpayers are required to prepare a local transfer pricing documentation (Local File), submit information on transfer pricing (TPR-C) and a TP statement confirming the the preparation of local TP documentation and marketability for documented transactions for 2020 at the end of December 2021 (for taxpayers whose financial year is the calendar year).

Importantly, in the case of domestic transactions that benefit from the exemption from the preparation of local transfer pricing documentation (Local File), taxpayers, although in a simplified form, are still required to include these transactions in the transfer pricing information (TPR-C).

Please note that the declaration must be signed with an electronic qualified signature / trusted profile by the members of the management board in accordance with the representation. Sending the TPR-C form via the eDeklaracje system is possible only by persons who have the appropriate proxy to sign the declaration submitted by electronic means of communication on behalf of the Company (i.e. the UPL-1 form submitted and registered with the competent tax office before sending the TPR-C form).

Comparative analyzes

Pursuant to the applicable regulations, the comparative analysis is updated at least every 3 years, unless a change in the economic environment significantly influences the prepared analysis and justifies updating in the year when this change occurs.

Therefore, taxpayers when preparing local transfer pricing documentation (Local File) for 2020 should prepare new or update their comparative analyzes for their intra-group transactions:

  • implemented in 2017, as their validity period expired at the end of 2019,
  • whose conditions were significantly affected by the state of the epidemic in relation to COVID-19.

It is extremely important for taxpayers to ensure that the comparative analysis is valid / up-to-date, as it has been an obligatory element of local transfer pricing documentation since the end of 2018. In addition, the results of the comparative analysis are necessary for the proper preparation and submission by the taxpayer of transfer pricing information (TPR-C), which is a tool that allows the tax authorities to select companies for tax audits. Only having a comparative analysis, persons authorized to represent the company may sign a declaration in which they certify that the intra-group transaction was carried out on terms that would be agreed between unrelated entities.

Controlled transactions

The thresholds for the value of intra-group transactions, beyond which the reporting obligation for transfer pricing arises, are as follows:

  • PLN 10 million - for goods and financial transactions,
  • PLN 2 million - for service and other transactions.

However, in accordance with the interpretations of tax authorities, the transaction of granting a free surety to a related entity is also subject to the documentation obligation, and persons authorized to represent the taxpayer may sign a declaration of the arm's length nature only if the taxpayer recognizes the market income on this account. The value of the transaction due to the free surety cannot be PLN 0.

Failure to comply with the reporting obligations regarding transfer pricing is exposed to sanctions that are imposed not only on the company, but also on persons authorized to represent it.