Links with the State Treasury and the transfer pricing documentation requirement

Why does the transfer pricing documentation exemption raise so many doubts? 

The exemption from the transfer pricing documentation requirement specified in Article 11n(5) of the CIT Act has been a topic provoking controversy among taxpayers for years. Although the provisions introducing this exemption were intended to simplify matters for entities linked to public administration, in practice, instead of simplifying, they introduced numerous interpretative difficulties. One of the issues that continues to raise doubts is whether this exemption applies only to direct capital links with the State Treasury (hereinafter also: “ST”) or local government units (hereinafter also: “LGUs”), or whether it also covers indirect links. This issue has not been conclusively resolved in case law, with noticeable discrepancies persisting between the approach of tax authorities and the administrative courts. 

Transfer pricing documentation exemption – what follows from Article 11n(5) CIT? 

Pursuant to Article 11n(5) of the CIT Act, the obligation to prepare local transfer pricing documentation specified in Article 11k(1) does not apply to controlled transactions where the links between the entities arise solely from a link with the State Treasury or LGUs or their associations. 
This exemption was introduced as part of an amendment to the CIT Act, whose provisions entered into force under the Act of 23 October 2018. 

Dispute over the scope of the exemption: direct or indirect links with the State Treasury? 

Although the legislator intended to simplify transfer pricing regulations for entities linked to public administration, this regulation unfortunately creates many problems for taxpayers, tax authorities and the courts alike. 

One of the key issues related to Article 11n(5) CIT that raises numerous doubts is determining whether the exemption covers: 

• • only direct links, or 

• • also indirect links, where the ultimate controlling entity is the State Treasury or an LGU. 

Positions of the tax authorities – mainly a restrictive approach 

Restrictive interpretation: exemption only for direct links 

In the context of this issue, for a long time tax authorities presented a restrictive approach, indicating that the exemption applies exclusively to entities directly linked with the ST or LGUs. An example of such interpretation is the individual ruling issued by the Director of the National Tax Information (hereinafter also: “Director of NTI”) dated 10 July 2020 (ref. 0111-KDIB1-2.4010.210.2020.1.AW), in which the authority stated that the exemption from the obligation to prepare transfer pricing documentation may apply only to entities whose links are direct, i.e. arise directly from the relationship with the ST or an LGU. 

In the analysed case, the applicant – a commercial company whose 100% of shares were held by a state-owned enterprise (hereinafter also: “SOE”) – sought to benefit from the exemption from the obligation to prepare local transfer pricing documentation in connection with transactions carried out, among others, with the SOE being its sole shareholder and with another SOE in which the enterprise held 45.65% of shares, with the remaining shares held by a voivodeship. The Director of NTI found that the applicant was linked to the SOE, and not directly to the State Treasury, and therefore refused the possibility of applying the exemption under Article 11n(5) of the CIT Act. 

Less frequent expansive interpretation 

A different approach was presented by the tax authority in an individual ruling dated 24 October 2025 (ref. 0111-KDIB1-1.4010.288.2021.10.BK), in which the Director of NTI adopted a position differing from the earlier one, stating that the exemption from the obligation to prepare local transfer pricing documentation may also apply in situations where the applicant is indirectly linked to the ST or an LGU through its shareholdings in entities in which the ST holds, directly or indirectly, at least 25% of shares, provided that no links exist other than those arising from the ST. 

It should be noted, however, that this individual ruling results from the challenge of the initial interpretation and the final judgments of the Regional Administrative Court in Warsaw of 21 June 2022 (ref. III SA/Wa 2658/21) and the Supreme Administrative Court of 18 June 2025 (ref. II FSK 1272/22). These courts overturned the authority’s original position, in which it held that the applicant, despite being indirectly linked to the ST through the SOE, was obliged to prepare local transfer pricing documentation because the exemption under Article 11n(5) of the CIT Act applies solely to entities directly linked with the ST. 

These circumstances indicate a certain trend in the practice of tax authorities – individual rulings issued in the initial proceedings often present a more restrictive interpretation, limiting the application of the exemption under Article 11n(5) CIT solely to direct links with the ST. Meanwhile, interpretations subject to complaint and reconsideration by administrative courts reveal a more flexible approach, taking a broader systemic context into account and allowing for the application of the exemption where indirect links are present. 

Divergent NSA rulings – two different judgments on very similar factual scenarios 

The matter is further complicated by the fact that within just over one year two Supreme Administrative Court judgments were issued concerning similar factual scenarios, yet presenting different positions on the application of the transfer pricing documentation exemption in cases of indirect links. 

Judgment of 18 April 2024 (ref. II FSK 910/21) 

The NSA examined a cassation complaint concerning an individual ruling (ref. 0111-KDIB1-2.4010.210.2020.1.AW), in which the applicant, a commercial company wholly owned by an SOE, sought confirmation of the possibility of applying the exemption from the obligation to prepare local transfer pricing documentation for transactions with the SOE, where documentation thresholds were exceeded. The NSA adopted a restrictive interpretation, finding that the exemption does not apply to indirect links. 

The court indicated that the only entity able to demonstrate exclusive linkage with the State Treasury in the presented factual scenario was the SOE, and not the company fully controlled by it. Consequently, only the SOE could benefit from the exemption under Article 11n(5) CIT if it conducted transactions with the ST or with another company whose 100% of shares were held directly by the ST. 

The NSA emphasised that the ST and other state legal persons operate based on state-owned assets but are separate from each other. Therefore, the mere participation of the ST in a corporate structure does not allow all entities in that structure to be regarded as directly linked to the state in a manner enabling the application of the exemption. The court stressed that the provision cannot be interpreted as covering companies in which state legal persons hold indirect shareholdings, as this would unjustifiably extend the scope of the exemption. 

Judgment of 18 June 2025 (ref. II FSK 1272/22) 

In contrast, a case involving a similar factual scenario ended with a judgment of a different nature – the NSA examined a cassation appeal lodged against an individual ruling (ref. 0111-KDIB1-1.4010.288.2021.3.BK), in which the applicant, a limited liability company wholly owned by an SOE fully controlled by the ST, sought confirmation as to whether it could benefit from the exemption from the obligation to prepare local transfer pricing documentation for transactions with the SOE and other entities in which the SOE held directly or indirectly at least 25% of the share capital. In this judgment, the NSA accepted the applicant’s reasoning, finding that the term “link”, as used in Article 11n(5) CIT, covers both direct and indirect links, provided that they ultimately lead to a relationship with the State Treasury. The court stated that the analysis of the provision indicates that the exemption may also apply to chains of links in which the ST exerts influence indirectly through subsidiaries. 

Regrettably, the short interval between these judgments – less than one year and two months – further highlights the lack of a unified understanding and the interpretative difficulties in applying Article 11n(5) CIT. 

Practical consequences for taxpayers 

The lack of coherent case law and differing NTI interpretations create significant tax risk for taxpayers. They must expect that: 

• • similar factual scenarios may be assessed differently, 

• • the tax authority may reject the exemption at the initial interpretation stage, 

• • only an administrative court may confirm a liberal interpretation, 

• • a detailed analysis of the ownership structure and documentation of its origins is necessary. 

Authors’ opinion 

The issue of applying the exemption under Article 11n(5) CIT remains an area of considerable legal uncertainty. This stems mainly from the visible inconsistency between the approach of tax authorities and the case law of administrative courts. Tax authorities largely apply a literal interpretation focusing on direct links with the ST or LGUs, whereas administrative courts more frequently adopt a purposive and functional approach, allowing the exemption to apply also in cases of indirect links between entities. 

Taxpayer uncertainty grows also due to the lack of a unified interpretation within the administrative judiciary. Although recent judgments indicate a tendency towards a more liberal approach, two NSA judgments issued over the past several months resolved the same issue differently. The short interval between these judgments further confirms the interpretative ambiguities and highlights the need for a harmonised interpretation. 

Until the interpretation becomes unified, we recommend: 

• • exercising caution when applying the exemption, 

• • obtaining individual tax rulings as protection, 

• • continuous monitoring of new judgments and NTI interpretations. 

Legal basis 

Chapter 1a – Transfer Pricing of the Act of 15 February 1992 on Corporate Income Tax (Journal of Laws of 2025, item 278 as amended) (the CIT Act).