Exempt transactions outside the TPR information

In the case analysed by the Director of the National Tax Information (KIS), the company as part of its business activity makes transactions with related parties. If the value of controlled transactions exceeds the thresholds specified in the regulations, then the company is obliged to prepare local transfer pricing documentation for the given financial year and submit transfer pricing information. At the same time, the company may be exempted from the obligation to prepare the documentation. The company’s doubts concerned the obligation to file transfer pricing information for homogeneous controlled transactions whose total value exceeds the documentation thresholds, both with related parties for which the exemption may be applied and with related parties for which the exemption cannot be applied.

– It follows from the interpretation of the Director of the KIS that a company is not required to disclose in the TPR information an exempt transaction performed with related entities if its value does not exceed the documentation thresholds. Also, if the value of the transaction is not exempt from the documentation duty and at the same time does not exceed statutory thresholds, the company does not have to prepare TPR information for such a transaction – points out Cyprian Werykowski, tax adviser, director at Thedy & Partnetrs.

According to the tax office’s explanations, if a controlled transaction is concluded simultaneously with related parties fulfilling the conditions for the exemption as well as with other related parties, when determining its value for the purposes of local transfer pricing documentation, the part of the transaction which was exempted from the documentation obligation (pursuant to Article 11n point 1 of the CIT Act) is not taken into account.

– That part of the transaction that meets the conditions for exemption and at the same time its value exceeds the documentation thresholds should be reported in the TPR information in a separate field – as a separate transaction – in a simplified manner. It should be indicated by selecting an appropriate option in the form that it is a Transaction exempt under Article 11n point 1 of the CIT Act – adds Cyprian Werykowski.

Let us remind that the documentation thresholds for a controlled transaction of a homogeneous nature are:

– PLN 10,000,000 – in the case of a commodity transaction;

– PLN 10,000,000 – in the case of a financial transaction;

– PLN 2,000,000 – in the case of a service transaction;

– PLN 2,000,000 – in the case of a transaction other than those specified in points 1-3.