Signing a loan agreement does not yet generate transfer pricing obligations
When the value of the loan actually used does not exceed the documentation threshold, and the documentation threshold only exceeds the value of the loan indicated in the agreement - the obligation to prepare transfer pricing documentation will not arise, according to a tax interpretation of 28 December 2022 (no. 0111-KDIB1-1.4010.701.2022.1.SG).
In the case under review, one company within the group has made available to the other the possibility of a credit facility of up to €200 million. To date, the company has not taken advantage of this opportunity, but may do so until 2025, according to the signed agreement.
– The interpretation also cites explanations from the Ministry of Finance, according to which, in the case of a loan transaction, in order to determine whether the value of the transaction exceeds the documentation threshold, the value of the loan principal for a given tax year should be examined on the basis of the agreement or other documents and, when this is not possible, on the basis of payments received or transferred. In the case of multi-year agreements, the related party must determine whether the capital value of a given loan exceeds the documentation threshold of PLN 10 million for the first and subsequent tax years. The value of the capital for a given tax year is determined on the basis of the highest value of the provided capital outstanding in the tax year for which the documentation is prepared – explains Cyprian Werykowski, tax adviser, director at Thedy & Partners.
Thus, if the company did not use or make available capital under the agreement, no transfer pricing documentation obligation arose on the part of the company in respect of the loan agreement and no obligation to provide transfer pricing information (TPR) arose. When the company uses the capital made available on the basis of the agreement in subsequent years and the capital used exceeds the equivalent of PLN 10 million in a given tax year, a transfer pricing documentation obligation arises on the part of the company and a transfer pricing information (TPR) obligation arises.
– It appears that a new line of interpretation is taking shape in the described area, which is importantly favourable for taxpayers. It is encouraging that the tax authorities are approaching intra-group loan agreements in this way, taking into account the guidelines of the Ministry of Finance – assesses Cyprian Werykowski.