New transfer pricing regulations come into force – Part 2

New transfer pricing regulations came into force on 01/01/2015. The new regulations will extend the scope of responsibilities related to documenting transactions with associated enterprises.

The amendments to the income tax acts include the introduction of a duty to prepare transfer pricing documentation whenever an entity and its associated enterprises enter together into an agreement to form:

• a partnership,
• a joint venture or a similar undertaking,
• conducting a business activity by a resident through a foreign establishment situated outside Poland.

The tax authorities will assess the rules agreed in the relevant agreement with regard to the rights of the shareholders (parties to the agreement) to participate in the profits or losses of the relevant undertaking. The criterion for the assessment of the distribution of the loss or profit among the shareholders (parties to the agreement) will be the compliance with the arm’s length principle.

In the case of a partnership, the duty to prepare transfer pricing documentation applies to agreements under which the total value of contributions made by the shareholders exceeds the PLN equivalent of 50,000.00 EUR In the case of a joint venture agreement or an agreement on a similar undertaking, such a limit refers to the value of the joint venture defined in that agreement, and if such a value has not been defined – to the joint venture value expected as of the date of concluding the agreement.

The transfer pricing documentation describing the collaboration under a partnership, joint venture or a similar agreement should specify the rules regarding the shareholders’ (parties to the agreement) rights to participate in the profits or losses of the undertaking.

Source: Rödl & Partner Newsletter
Date: 12.01.2015