Attention Taxpayers! New sanction! Keep an eye on Master File before it’s too late

Group documentation is treated a bit lightly by taxpayers. After the hassle of preparing Local File with transfer pricing analyses and properly completing and submitting the TP-R form, many taxpayers would like to take a breather from transfer pricing obligations. However, we would like to remind you that for some taxpayers, group documentation is just as mandatory and important from a transfer pricing perspective as Local File or analyses.

New hefty fines for no Master File!

The amended fiscal penal regulations also address sanctions related to non-compliance or improper fulfillment of obligations related to group documentation for the year 2022. With the change in the regulations, the Legislature has indicated that entities that, contrary to their obligation, fail to attach group transfer pricing documentation to local transfer pricing documentation are subject to a fine of up to 720 daily rates. Such a high penalty may also be imposed on an entity that includes inaccurate information in the Master File. A slightly lower fine, up to 240 daily rates, is stipulated for preparing the indicated documentation after the statutory deadline.

As a result, the penalty for failing to prepare group transfer pricing documentation or including information in it that is inconsistent with the actual state of affairs can be as high as PLN 34.5 million! On the other hand, preparation of a Master File after the statutory deadline can risk a fine of up to more than PLN 11.5 million.

And although we have not yet encountered such high penalties imposed on a taxpayer for failure to fulfill or improperly fulfill transfer pricing obligations, it is worth considering the possibilities available to the tax authority. It cannot be assumed that such severe penalties will not be applied in the future. Especially since the number of transfer pricing audits is increasing year by year. According to data from the Ministry of Finance, over 400 taxpayers have been selected for audits based solely on the TP-R form. During such an audit, the authority demands the submission of complete transfer pricing documentation, and thus also the Master File (if the taxpayer is required to have one).

Therefore, it is so important to check whether the entity is required to have group transfer pricing documentation.

Who is subject to the Master File obligation?

First of all, regardless of meeting the prerequisites described below, if a taxpayer does not carry out controlled transactions in a given year covered by the documentation obligation (Local File), then there is no automatic obligation to have a Master File.

However, all taxpayers preparing local documentation in a given year must verify whether they are also subject to the obligation of having group documentation. The obligation to prepare group documentation applies to entities subject to full or proportional consolidation, belonging to a group of related parties:

  • for which the financial statements are prepared, and
  • whose consolidated revenues in the previous fiscal year exceeded PLN 200,000,000 or the equivalent amount.

Importantly, the group transfer pricing documentation may be prepared by another Group entity. The regulations also allow the document in question to be prepared in English, with the tax authority having the right to request a translation into Polish within 30 days.

Keep in mind that regardless of whether the Master File is prepared by the taxpayer or another Group entity, it must comply with Polish regulations and be consistent with the information shown in the local transfer pricing documentation.

What should the Master File contain?

As a rule, the Master File presents information about the activities of a group of related parties in a given tax year. According to Polish regulations, group transfer pricing documentation must primarily include:

  • a description of the group of related parties, including, among other things, the ownership structure and the object and scope of the group’s activities,
  • a description of the significant intangible assets of the group,
  • a description of the group’s significant financial transactions – both for transactions with related and unrelated parties,
  • financial and tax information of this group, i.e., the annual consolidated financial statements and information about concluded advance pricing agreements (APA) or other tax interpretations.

Thus, the Polish legislator has precisely defined the elements that the Master File should contain, which should be kept in mind when receiving the indicated document from a Group related party. Often ,foreign entities  preparing transfer pricing documentation, rely on the regulations in force in the given jurisdictions or the OECD Guidelines, which may be too general. Always verify the compliance of the received Master File with the Polish regulations, as well as with the information indicated in the local transfer pricing documentation (the entire transfer pricing documentation must be consistent).

Deceptively long term

Group transfer pricing documentation should be prepared by the end of the twelfth month after the end of the tax year. In practice, for most entities whose tax year coincides with the calendar year, the deadline for preparing group documentation for 2022 is December 31, 2023.The deadline may seem deceptively distant. November 30 of this year is the deadline for filing the TP-R form, and in our experience, in many cases, only after this reporting obligation is fulfilled, taxpayers’ attention will focus on group documentation. This means that taxpayers will be left with a month to obtain and verify (and often supplement) the Master File prepared by the Group, or prepare the group documentation themselves. This is actually very little time, and given the Christmas and New Year period, the time will pass even faster.


It is important to bear in mind that the Master File is as much a part of transfer pricing documentation and reporting obligations as Local File. This is also confirmed by the high penalties (not at all lower than those for Local File). With the upcoming deadline for preparing group transfer pricing documentation, it is worth analysing now whether the entity is required to prepare this document. Preparing a Master File that corresponds to Polish regulations (whether from scratch or based on documentation prepared by the group) can be time-consuming, due to the need to obtain and present a lot of information that is often only available at the Group level.

We therefore encourage you to analyse whether you are subject to the obligation to prepare group transfer pricing documentation now. We will be happy to support you both in preparing the Master File documentation and in verifying the document you receive from the Group in terms of its compliance with Polish regulations.


Martyna Leszczyńska

Consultant, Transfer Pricing Practice

Tel.: +48 503 975 116