MF clarifies group documentation rules
The Minister of Finance has responded to questions concerning the preparation of group documentation as part of transactions between related parties in a parliamentary interpellation.
Three questions were asked in the interpellation. The first question concerned whether, in the event that a taxpayer does not have information on compliance by a group of related entities to which it belongs with conditions obliging it to prepare group master file documentation, a statement by the parent company on non-compliance with conditions obliging it to prepare group master file documentation would be sufficient to avoid possible consequences of not having such documentation.
– The Minister’s explanations indicate that the transfer pricing regulations do not provide for an obligation to document the lack of conditions for the preparation of the group transfer pricing documentation, e.g. by obtaining a statement from the parent company on its failure to meet the conditions obliging it to prepare such documentation,” remarks Cyprian Werykowski, tax adviser, director at Thedy & Partners.
At the same time, the Minister stipulated that each entity should show due diligence in fulfilling its obligations imposed by tax regulations, including documentation obligations. In case of doubts as to the existence of the documentation obligation, the related entity should take appropriate steps to determine whether it is covered by the obligation to attach the group documentation to the local transfer pricing documentation (e.g. by verifying the amount of revenue in the group’s consolidated financial statements).
The second question was whether in a situation where an entity is exempt from the obligation to prepare local transfer pricing documentation it will be exempt from the need to prepare group documentation.
– Here the Minister confirmed that such exemption will apply – adds Cyprian Werykowski.
The last area dealt with by the Minister concerned the conclusion of a transaction with an unrelated entity, but with its registered office in a tax haven. Here a doubt arose as to whether in the situation of preparing local documentation, the necessity of preparing group transfer pricing documentation would also arise.
– The Minister of Finance explained that the preparation of local transfer pricing documentation only for the conclusion of a transaction with an unrelated entity, which has its registered office in a so-called tax haven, does not generate the obligation to prepare group documentation, the Thedy & Partners expert said.
Interpellation no. 23727