Transfer pricing documentation and Estonian CIT in Poland – what the Supreme Administrative Court of Poland (NSA) ruling means for companies

Companies that have chosen the lump-sum taxation on corporate income in Poland, commonly referred to as Estonian CIT, still need to analyse their transfer pricing obligations. The issue of transfer pricing documentation and Estonian CIT is particularly important for companies operating within capital groups, companies with foreign shareholders and businesses that settle transactions with shareholders or other related parties.

In its judgment of 17 February 2026, case no. II FSK 694/23, the Supreme Administrative Court of Poland (NSA) confirmed that choosing Estonian CIT does not exclude the application of transfer pricing regulations. This means that a company using the lump-sum taxation model cannot automatically assume that documentation, reporting or analytical obligations related to controlled transactions no longer apply.

The ruling is highly relevant in practice because it resolves doubts that have existed for several years. Estonian CIT changes the moment and mechanism of taxation, but it does not eliminate the general obligations of a Corporate Income Tax (CIT) taxpayer in Poland unless the law expressly provides for such an exclusion.

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What was the case examined by the Supreme Administrative Court about?

The case concerned a company that had chosen lump-sum taxation on corporate income and applied the provisions of Chapter 6b of the Polish CIT Act. At the same time, the company entered into transactions with related parties, which required an assessment of whether transfer pricing regulations applied, in particular Articles 11k–11t and Article 11e of the CIT Act.

The company requested an individual tax ruling because it wanted to confirm whether, after choosing Estonian CIT, it still had to apply transfer pricing regulations. Its position was based on the assumption that Chapter 6b of the CIT Act comprehensively regulates the rules of lump-sum taxation on corporate income. Since that chapter does not expressly refer to transfer pricing documentation rules, the company argued that these provisions should not apply.

The Director of the National Revenue Information (KIS) disagreed with this approach. In the individual tax ruling of 1 July 2022, reference no. 0111-KDIB2-1.4010.99.2022.1.PB, the authority stated that transfer pricing regulations continue to apply to taxpayers using lump-sum taxation on corporate income.

This position was later confirmed by the Provincial Administrative Court in Poznań in its judgment of 11 January 2023, case no. I SA/Po 697/22. The case was finally resolved by the Supreme Administrative Court in its judgment of 17 February 2026, case no. II FSK 694/23, which dismissed the company’s cassation appeal.

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Why did taxpayers have doubts?

The doubts resulted from the structure of Estonian CIT. Under the standard CIT model in Poland, a taxpayer determines revenue, tax-deductible costs, taxable income or tax loss, and then settles tax under general rules. Under Estonian CIT, the taxation mechanism is different. As a rule, tax is primarily linked to profit distribution or other events defined in the CIT Act, such as hidden profits or expenses unrelated to business activity.

For this reason, some taxpayers argued that since lump-sum taxation on corporate income creates a separate taxation model, transfer pricing rules should not apply in the same way as under standard CIT. The issue was particularly visible in relation to documentation exemptions, the analysis of taxable income or tax loss, and the assessment of the impact of controlled transactions on the tax base.

However, this does not mean that transactions with related parties cease to be relevant from a tax perspective. On the contrary, under Estonian CIT, settlements with shareholders and related parties may be important both from a transfer pricing perspective and in terms of hidden profit risk. Therefore, choosing this taxation model requires organising intra-group flows, not only checking the formal conditions for entering Estonian CIT.

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The Supreme Administrative Court’s position: no exclusion means continued application of the rules

The Supreme Administrative Court of Poland confirmed that transfer pricing regulations are general provisions applicable to CIT taxpayers unless the legislator expressly provides otherwise. There is no such exclusion in the provisions governing Estonian CIT.

The key point of the ruling is the distinction between the absence of a reference and the exclusion of legal provisions. The fact that Chapter 6b of the CIT Act does not include an additional reference to transfer pricing regulations does not mean that Articles 11k–11t and Article 11e of the CIT Act cease to apply to taxpayers using lump-sum taxation on corporate income.

In practice, this means that the form of taxation does not determine, by itself, whether transfer pricing obligations exist. What remains decisive is whether the company carries out controlled transactions, what their value is, whether statutory documentation thresholds have been exceeded and whether the taxpayer may benefit from an exemption provided for in the regulations.

NSA Judgment·17 February 2026·II FSK 694/23

Estonian CIT does not switch off transfer pricing obligations

1. Estonian CIT regime
   Lump-sum taxation under Chapter 6b of the CIT Act.
3. No express TP exclusion
   No express exclusion from Articles 11k–11t and 11e of the CIT Act.
5. Transfer pricing rules still apply
   Documentation, TPR information and analysis obligations remain.

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• Poland
• CIT
• Transfer Pricing
• NSA Ruling

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Estonian CIT does not remove the need to monitor related-party transactions

The Supreme Administrative Court ruling confirms that a company using Estonian CIT should monitor transactions with related parties on the same general basis as other CIT taxpayers, while taking into account the specific nature of lump-sum taxation on corporate income.

In practice, the company must analyse whether it carries out controlled transactions, understood as business activities identified based on the actual conduct of the parties, where the terms were agreed or imposed as a result of relationships between them. This does not only cover classic sales of goods or provision of services. Controlled transactions may also include financing, guarantees, cost recharging, asset use, licences, lease agreements, support services or other intra-group settlements.

For companies with foreign shareholders, consistency between local documentation and the group settlement model is particularly important. If a Polish company uses services provided by a shared services centre, receives financing from a related entity, pays licence fees or purchases management services, it should have documents showing the economic justification of the transaction and the arm’s length nature of the settlement. In such cases, transfer pricing advisory in Poland may be needed not only when preparing documentation, but already at the stage of identifying transactions and assessing tax risk.

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When may transfer pricing documentation be mandatory?

The obligation to prepare local transfer pricing documentation does not arise automatically simply because a company uses Estonian CIT. It arises when the conditions set out in Polish transfer pricing regulations are met.

A company should analyse in particular whether:

• there are capital, personal or other relationships that may result in significant influence over transaction terms;
• transactions are carried out with related parties;
• the transactions are homogeneous;
• the transaction value in the tax year exceeds statutory thresholds;
• documentation thresholds have been exceeded;
• an exemption from the documentation obligation may apply;
• a transfer pricing analysis should be prepared;
• there is an obligation to submit TPR information, i.e. transfer pricing information submitted to the tax administration and covering selected data on controlled transactions carried out by the taxpayer.

For companies using Estonian CIT, it is particularly important not to postpone this analysis until the end of the year. Lump-sum taxation on corporate income may limit certain current tax settlements, but it does not remove the obligation to collect data needed to assess controlled transactions. If a company only starts identifying transactions and verifying their pricing after the end of the year, the risk of errors increases significantly.

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TPR information remains an important reporting obligation

If a company is obliged to prepare transfer pricing documentation, it should also verify whether it must submit TPR information. This is one of the key reporting elements in the area of transfer pricing in Poland.

TPR should not be treated merely as a technical form. The data reported in transfer pricing information should be consistent with transfer pricing documentation, accounting books, financial statements and the actual course of transactions. In practice, Polish tax authorities may use this information for risk analysis and selecting entities for tax audits.

For Estonian CIT taxpayers, the quality of accounting and financial data is particularly important. Since this taxation model shifts the focus from the classic calculation of taxable income to financial result, profit distribution and specific categories of benefits, inconsistencies between accounting records, TPR information and transfer pricing documentation may be especially problematic.

For this reason, transfer pricing should be analysed together with ongoing accounting and CIT settlements. For companies operating in Poland as part of an international group, it is also important that local reporting data remains consistent with the intra-group settlement policy and documentation prepared at group level.

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Documentation exemptions under Estonian CIT

The Supreme Administrative Court of Poland ruling confirms that transfer pricing regulations apply to Estonian CIT taxpayers. However, it does not resolve all practical issues that may arise when applying those rules.

One such issue is the possibility of using documentation exemptions. Transfer pricing regulations provide for certain exemptions, including for selected domestic transactions if statutory conditions are met. Some of these conditions refer to concepts typical of standard CIT, such as tax loss from a source of revenue.

For Estonian CIT taxpayers, assessing these conditions may be more difficult because the company does not settle income tax under the classic mechanism. This does not mean that exemptions should be automatically excluded or automatically applied. A separate analysis of the specific facts, transaction type, status of the parties and statutory conditions is required.

This is particularly important for companies that have many domestic transactions with related parties and assume that an exemption will apply without further verification. Such an approach may be risky if the company does not have documents confirming that the conditions for the exemption have been met.

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Transfer pricing and hidden profits under Estonian CIT

In companies taxed under Estonian CIT, transfer pricing should also be analysed in the context of hidden profits. These are specific benefits provided in connection with the right to participate in profit, where the beneficiary is a shareholder or an entity directly or indirectly related to the shareholder.

Not every transaction with a related party will constitute hidden profit. Not every transaction subject to transfer pricing analysis will automatically result in taxation under Estonian CIT. However, the two areas may overlap in practice.

Examples may include settlements for services provided by a shareholder, lease of assets from a related entity, financing granted by a shareholder, use of intangible assets or other benefits whose terms differ from market conditions or lack sufficient business justification.

In such cases, the company should analyse not only whether the price reflects arm’s length terms, but also whether the benefit is connected with the right to participate in profit.

This requires combining the transfer pricing perspective, Estonian CIT regulations and accounting. In more complex ownership structures, ongoing tax advisory in Poland may be particularly useful, especially when transactions are recurring or material in value.

Related-party settlements·Two regimes

Related-party transactions require both transfer pricing and hidden profit analysis

Under Estonian CIT, a transaction with a related party may matter both for transfer pricing and for the assessment of hidden profits.

Transfer pricing documentation

May trigger a local file, benchmarking/compliance analysis and TPR information once statutory thresholds are exceeded.

Hidden profits (Estonian CIT)

Benefits connected with the right to participate in profit, where terms differ from market conditions or lack business justification.

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Where both regimes may overlap

• Shareholder services
• Asset lease from a related party
• Shareholder financing
• Use of intangible assets

The two areas may overlap — not every related-party transaction is a hidden profit, so each case needs its own assessment.

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Which transactions should the management board pay attention to?

From the management board’s perspective, the key issue is to determine which settlements with related parties may generate documentation obligations or increased tax risk. This applies especially to high-value transactions, recurring transactions and benefits that are difficult to compare with market conditions.

Particular attention should be paid to:

• loans, credits, cash pooling and other forms of intra-group financing;
• sureties and guarantees provided by related parties;
• management, administrative, accounting, IT, advisory or marketing services;
• lease of real estate, machinery, equipment or vehicles from shareholders or related parties;
• licences, fees for trademarks, know-how, software or other intangible assets;
• supplies of goods between group companies;
• cost recharging;
• transactions with shareholders and management board members;
• settlements with a foreign parent company or shared services centre.

In each of these cases, the contract itself is not enough. What also matters is the actual performance of the service, the method of calculating remuneration, evidence confirming receipt of the service, consistency with accounting records and the ability to demonstrate that independent entities could have agreed similar terms.

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Importance of the ruling for companies with foreign shareholders

The Supreme Administrative Court of Poland ruling is particularly important for companies with foreign shareholders that use Estonian CIT or are considering choosing this taxation model. Such entities often operate within international structures where transactions with related parties naturally occur.

A Polish company may, for example, use head office services, pay licence fees, receive financing, participate in a cost recharging model or sell goods to other group companies. In such situations, transfer pricing obligations are not merely a formality.

Documentation should reflect the actual business model, the functions performed by the parties, the risks assumed and the assets used in the transaction.

For a foreign investor, it is also important that Estonian CIT should not be assessed only from the perspective of liquidity benefits. Before choosing this form of taxation, it is worth analysing the intra-group settlement structure, potential hidden profits, transfer pricing obligations and the impact of the adopted model on reporting. In practice, this approach helps avoid a situation where the company meets the entry conditions for Estonian CIT but is not prepared to properly document group transactions.

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What should companies using Estonian CIT do?

After the Supreme Administrative Court ruling, companies taxed under the lump-sum model should verify whether their approach to transfer pricing is complete and consistent. It is not enough to state that the company uses Estonian CIT and does not settle tax under standard rules.

After the NSA ruling·Action points

What Estonian CIT taxpayers should verify now

1. 01
   Identify related parties

   Relationships may be capital, personal or based on the actual ability to exercise significant influence — including shareholders, board members and entities they control.
2. 02
   Prepare a list of controlled transactions

   Not only the sale and purchase of goods, but services, financing, lease arrangements, licences, guarantees, sureties and cost settlements.
3. 03
   Determine homogeneous transaction values

   Check whether documentation thresholds have been exceeded, based on accounting data, contracts and the actual course of cooperation.
4. 04
   Verify documentation exemptions

   Under Estonian CIT do not apply them automatically — some conditions refer to categories typical of standard CIT and need a separate analysis.
5. 05
   Ensure transfer pricing documentation, TPR and accounting records are consistent

   Prepare local documentation, a benchmarking or compliance analysis and TPR information consistent with the accounting books.

In practice, several organising steps are recommended.

First, related parties should be identified. Relationships may be capital-based, personal or result from the actual ability to exercise significant influence over another entity’s business decisions. In owner-managed or family companies, relationships with shareholders, management board members and entities controlled by them may also be particularly important.

Second, the company should prepare a list of controlled transactions. This should include not only the sale and purchase of goods, but also services, financing, lease arrangements, licences, guarantees, sureties and cost settlements.

Third, the company should determine the value of homogeneous transactions and check whether documentation thresholds have been exceeded. The analysis should be based on accounting data, contracts and the actual course of cooperation.

Fourth, the possibility of applying documentation exemptions should be verified. In the case of Estonian CIT, this should not be done automatically, because some exemption conditions refer to categories typical of standard CIT, which may require a separate analysis of the specific facts.

Fifth, if the documentation obligation arises, the company should prepare local transfer pricing documentation, a benchmarking analysis or compliance analysis, and TPR information in line with applicable requirements.

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Why is early analysis safer than acting after year-end?

Transfer pricing requires data that often cannot be reliably reconstructed only after the end of the year. This applies especially to intangible services, cost recharging, financing, settlements with the group head office or services provided by shareholders.

If the company collects contracts, calculations, cost statements, confirmations of service performance and financial data on an ongoing basis, preparing documentation is much easier. If it only does so in response to a reporting deadline or questions from the tax authority, the risk of inconsistencies increases.

It should also be remembered that data reported in TPR information should be consistent with transfer pricing documentation and accounting books. For companies supported by an external accounting office or a group finance department, good coordination between accounting, tax advisers and people responsible for intra-group settlements is essential. This is where the combination of accounting services in Poland with tax and documentation analysis becomes practically important, especially for foreign companies doing business in Poland.

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Summary

The Supreme Administrative Court judgment of 17 February 2026, case no. II FSK 694/23, confirms that companies taxed under Estonian CIT are not exempt from transfer pricing obligations. The absence of an express reference in Chapter 6b of the CIT Act does not mean that Articles 11k–11t and Article 11e of the CIT Act cease to apply.

For entrepreneurs, this means the need to regularly monitor transactions with related parties. If the company exceeds statutory thresholds and cannot benefit from an exemption, it should prepare transfer pricing documentation and verify the obligation to submit TPR information.

Estonian CIT may be a beneficial taxation model, especially from the perspective of profit reinvestment and financial liquidity. However, it is not a simplification in every tax area. Companies operating in capital groups, including companies with foreign shareholders, should analyse intra-group settlements particularly carefully, because they may be relevant both for transfer pricing and for the assessment of hidden profits.

In practice, a safe approach consists of early transaction identification, proper organisation of accounting data, assessment of documentation obligations and consistency between transfer pricing documentation, TPR information and the actual group settlement model.

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Interpretative basis

• Individual tax ruling issued by the Director of the National Revenue Information (KIS) on 1 July 2022, reference no. 0111-KDIB2-1.4010.99.2022.1.PB;
• Judgment of the Provincial Administrative Court in Poznań of 11 January 2023, case no. I SA/Po 697/22;
• Judgment of the Supreme Administrative Court (NSA) of 17 February 2026, case no. II FSK 694/23.

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