TPR is not another regular form. File i(T) like a (P)(R)o with us!
The deadline for filing TPR for 2021 with the Head of KAS is looming – 31 December 2022! Do not work on the TPR at the very last minute. Instead, complete it as early as possible. Failure to comply with this obligation can be costly.
The prospect of penalties
Completing the form hastily may result in incorrect calculations of the reported data and the inability to identify risks in advance. Also, please note tax authorities use data contained in the TPR to select companies for inspection – better safe than sorry when it comes to filling the form in.
There are also financial matters involved since the failure to file TPR form, its late filing or providing in it information that is inconsistent with the transfer pricing documentation or the actual state is punishable by a fine.
If you have not started works in this area yet, this is the last call to act. It is not worth delaying work until the last minute.
A quick review on TPR
TPR contains data on transactions made between related entities and by taxpayers and companies that are not legal persons with entities having their place of residence, registered office or management in the territory or in the country applying harmful tax competition (the so-called tax havens).
What is TPR form actually used for? It is a tool for tax administration to obtain information that it uses to analyze the risk of understated taxable income in the field of transfer pricing and to perform other economic or statistical analyses. Data featured in the form are used primarily to select taxpayers for tax inspections by tax authorities.
TPR is split into sections. The following two are of paramount importance for tax authorities:
- section related to financial ratios of an entity that give a picture of the company’s financial standing,
- section covering a given transaction where taxpayers report on, for instance, the review of transfer price, financial ratio, transaction result or the lower and upper range from the benchmarking analysis.
Tax authorities will pay special attention to (i) significant changes in financial ratios between years, (ii) reporting a tax loss over the years, and (iii) financial ratios and the result on a transaction different than for comparable companies in the same industry.
When is the TPR form required?
TPR form is mandatory for taxpayers who must prepare transfer pricing documentation on the basis of statutory thresholds. As a reminder – it means exceeding these net transaction values for a given type of homogeneous transaction with a related entity:
- for a commodity transaction: PLN 10m,
- for a financial transaction: PLN 10m,
- for a services transaction: PLN 2m,
- for other transactions: PLN 2m,
- for a financial transaction with a tax haven: PLN 2.5m (That’s right! It’s not a mistake),
- for a different transaction with a tax haven: PLN 500k (Again – it’s not a mistake).
The important part is that these documentation thresholds should be set separately for the revenue and the cost transactions.
On top of that, the following are also subject to file the TP information: related entities entering into domestic transactions exempt from the obligation to prepare documentation, transactions benefiting from the safe harbor exemption, transactions made by entities with the status of micro- or small entrepreneurs benefiting from the exemption from the obligation to prepare transfer pricing analysis and transactions with third party tax haven entities that have exceeded the documentation threshold.
How to properly fill in the TPR form?
As you can see, TPR is not a regular checkbox form – it is a complicated one where you need to report a number of detailed information. If you have not yet fulfilled this obligation, we will be happy to support you in this respect.
We also encourage you to join our training (on-demand) on how to correctly complete transfer pricing information. The training will address both the technical aspects of filing the TPR and practical case studies on individual sections of the form (e.g. commodity transactions, financial transactions, etc.). For more information about the training, go to https://www.mddp.pl/jak-w-praktyce-wypelnic-formularz-tpr/.
Senior Manager, Transfer Pricing Practice
Tel.: (+48) 533 889 036
Consultant, Transfer Pricing Practice
Tel.: (+48) 503 973 960