Revolutionary modifications in transfer pricing (TP)
regulations, introduced by the Corporate Income Tax (CIT) law
amendment valid since January 1 2017, may be followed by more
changes binding from 2018. A new draft CIT Law amendment was
signed by the President on November 22 2017.
It introduces the below modifications.
No limit for expenditure on intangible services in the case
of an APA
The amendment provides for the possibility of recognising
all intangible and legal assets as tax-deductible costs if the
taxpayer draws up an advanced pricing agreement (APA) with the
chief of the National Tax Administration (NTA).
This rule can be applied during the term of the APA as well
as both the tax year when the decision was made and the
APA transactions exempt from TP documentation
The legal amendments introduce another advantage for
taxpayers who have APAs. An APA is already an effective method
of mitigating tax risk and from January 1 2018 it also becomes
exempt from the obligation for taxpayers in terms of preparing
transfer pricing documentation. The exemption is available to
taxpayers who receive a relevant decision from the chief of the
Arm's length nature of transactions in tax capital groups
From January 1 2018, the provisions were repealed under
which companies in TCGs were able to agree between themselves
conditions of a transaction which might differ from the
conditions available to unrelated entities. Therefore,
effective January 1 2018, TCG entities must set the terms and
conditions of transactions carried out with other TCG members
at the market level.
Moreover, the amendment introduces an exemption from the
obligation to prepare TP documentation for transactions between
TCG entities. This obligation will now apply solely to
transactions or other events between TCG entities with related
parties outside the TCG.
Exemptions from documentation obligations for entities
related solely through the state treasury or a local government
These TP provisions do not apply to entities that could be
classified as related solely on the basis of a connection
between them through the state treasury or a local governmental
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