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On 7 September 2017 Decrees on information included in the transfer pricing documentation on corporate income tax and individuals [Decree] were filed with the Ministry.

The final version of the Decree contains a number of significant changes clarifying the contents of specific documentation items as well as some editorial changes. However, some changes may still raise taxpayers’ doubts while preparing documents required.

The final version of the Decree introduces a glossary of terms explaining 6 key concepts, i.e. functional analysis, party to the transactions or other dealings, functional profile, value-added chain.

Additionally, an explanatory memorandum to the Decree states that the list of documentation items is not exhaustive and the taxpayers mayprovide additional information if the specifics of a transaction so require.

Local File – clarifying changes

Most changes, compared to the draft version of the Decree, should be consideredpositive since they specify the content of specific items of the Local File.

According to the final version of the Decree, taxpayers’ documentation must state: (i) value of the transactions or other dealings resulting from the invoices issued and (ii) received or transferred payments. Only if the invoices for the transactions are not issued, the taxpayer should indicate in the documentation the value resulting from the contract or other documents.

Additionally, the legislator clarified that the information on the type of relations between entities should be presented in accordance with the date of beginning or end of the tax year (if the taxpayer prepares the tax documentation after the end of the tax year).

The change that can raise the most doubts is referring to an indeterminate concept of the type of activity in functional analysis, cash flows related to the transaction or a description of the transaction. At the same time, for other items -- like the value of the transaction or functional profile, there is still a reference to the type of transaction or other dealings. Taxpayers may have doubts whether the transactional part of the Local File should refer to (as it was before) particular types of transactions or to the type of activity (which is a broader concept).

Clarification of the benchmarking analysis items

In the benchmarking analysis, the key change is introducing a regulation allowing not to include all items in benchmarking. However, if that is the case the taxpayer must state reasons for the absence of such information: by proving that the benchmarking analysis does not require having or using them.

The explanatory memorandum to the Decree states that Article 9a (2c) -- referring to the description of conformity which the taxpayer may prepare in the case of lack of data allowing preparing standard benchmarking analysis -- is beyond the scope of the Decree. Consequently, taxpayers received no guidance on how such a description should be prepared.

Other changes referring to the benchmarking analysis are of a clarifying nature, e.g. indicating that the description of the course of the transaction should also include functional analysis or clarification that the comparable data refer to financial data or financial ratios.

Master File – clarifying changes

The biggest number of clarifying and editorial changes were introduced for the Master File.

A major change is clarification that when describing a business financing, taxpayers in the case of intra-group financing must indicate the related entity responsible for this function, together with information about its name and location of effective board of this entity.

Another significant change is the need for the taxpayers to identify a significant value-added chain (also in the form of a diagram), including a value-added chain whose generated revenue represents at least 5% of the group’s revenue.

One of the most controversial obligation in the draft version of the Decree -- due to the sensitivity of data presented -- was to provide a description of the conditions under which loans/credits were granted by independent entities. According to the final version of the Decree, taxpayers must only present a list of loans/credits without specifying their exact terms and conditions.


As far as business factors are concerned, according to the Decree, taxpayers may state the ones that in their opinion mostly affect the profits generated by the group.

Other changes concerning the wordings in benchmarking analysis have a clarifying nature, e.g. indication that (i) the main geographical markets are those where at least 10% of profits is generated, (ii) the list of loans/credits received should include transactions that constitute over 5% of the total amount of external financing or (iii) the necessity of indicating, for intangible assets, the biggest R&D centers (in terms of employed staff members) together with their location.

Legal, ownership and management structure was abandoned in the Decree. In the final Decree the only obligatory element as far as the group structure is concerned is organizational structure (with detailed explanation of what to cover).

Also, the explanatory memorandum to the Decree states that if the transfer pricing policy contains additional information to those indicated in the Decree as mandatory, taxpayer cannot delete it with the aim of filing only the mandatory items with the tax authorities.


The Decree introduced a number of clarifying and editorial changes so that taxpayers find it easier to understand the content of individual items of Local File, benchmarking analysis and Master File. Most changes addressed doubts raised by the taxpayers during consultation and should be considered positive.

The most doubtful change is the reference to the type of activities carried out by the taxpayer in some items of Local File andreference to the transactions carried out by the taxpayer in other items of Local File.


Whenever needed or if necessary, please contact us at:

Renata Dłuska   tel. + 48 22 322 68 80,

Magdalena Marciniak tel. + 48 22 322 68 84

or the Company’s MDDP advisory

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