Transfer pricing are the costs set by entrepreneurs for goods, intangible goods and services that are provided for related parties. Related parties include plants, subsidiaries, branches or other enterprises.
Entrepreneurs rely on market prices i.e. amounts that are used in transactions between (independent) parties.
Two functions of transfer pricing:
- distribution of income – during the determination of transfer pricing, a certain safety margin is maintained, which affects tax planning and therefore affects the amount of taxable earnings
- control – activities related to controlling, planning and coordinating which can affect the functioning of the company
To whom the transfer pricing applies?
- domestic entity – participates directly or indirectly in the management and controlling of other enterprise that is located abroad or has a share in the company’s capital,
- foreign entity – participates directly or indirectly in the management of the domestic entity or has a share in its capital,
- natural/legal person –participates in managing and controlling the foreign and domestic entity or has a share in their capital
Changes in transfer pricing
1. Documentation statement
It is not required anymore to submit a statement regarding the preparation of local transfer pricing documentation. The statement is now a part of TPR-C (Transfer Pricing Reporting – Country-by-Country) and is submitted to a tax authority.
Taxpayers are obliged to disclose the information regarding the renumerations related to restructurings.
3. Allocation of transaction values to countries
It is required to assign value of transactions to each country. It is also required to calculate new financial index related to the shares of operating expenses and general operating expenses.
4. Comparability adjustments
It is important to determine whether the transaction has changed by more/less than 30%. Usage of different range should be included in the documentation.
5. Transactions covered by pricing agreements
Transactions covered by tax or investment agreements are required to be included in TPR-C.
6. Micro or small entrepreneur status
Taxpayers are obliged to prove their micro or small entrepreneur status. In that case there is less information to be filled in the TPR-C.
7. Re-invoicing transactions
Category F has been created to improve the reporting of reinvoicing transactions.
Text based on: https://www.ey.com/pl_pl/tax/ceny-transferowe-zmiany-w-2023-r, https://benchmarket.pl/ceny-transferowe/