Transfer pricing adjustments – global challenges, domestic obligations

Transfer pricing adjustments (TP adjustments), despite their long-standing presence in both tax law and tax practice, remain one of the most complex issues within the transfer pricing area. Their correct settlement is of key importance not only from the perspective of local tax compliance, but also in the context of double taxation risk and cross-border disputes. 

Before making a transfer pricing adjustment, it is essential to consider the perspective of both parties to the controlled transaction and to ensure that the actions are consistent with the arm’s length principle. 

The end of the tax year is a particularly important moment for analysing transfer pricing matters, including potential TP adjustments. It is at the stage of closing financial accounts that taxpayers verify whether the results of transactions carried out with related parties reflect market conditions, taking into account actual financial results, the functional profile and the risks borne. 

Why are transfer pricing adjustments so important? 

Properly implemented TP adjustments allow for: 

• • elimination of errors in tax settlements – adjustments make it possible to align settlements with actual financial results and economic reality, 

• • reflecting the arm’s length nature of intra-group settlements – adjustments enable remuneration levels to be aligned with market conditions and the functions performed, assets used and risks assumed, 

• • safe recognition of adjustments in taxable income or tax-deductible costs – meeting statutory conditions allows adjustments to be recognised for tax purposes in compliance with applicable regulations, 

• • reduction of double taxation risk – a consistent approach adopted by both jurisdictions reduces the risk of challenges by tax authorities. 

Transfer pricing adjustments in an international context – the OECD and the European Union 

The issue of TP adjustments has been largely standardised at the international level, which is a natural consequence of economic globalisation and the growing importance of transactions between related parties. 

OECD Guidelines 

The OECD Transfer Pricing Guidelines expressly address TP adjustments, indicating that their purpose is to ensure that: 

• • related parties receive remuneration appropriate to the functions performed, assets employed and risks assumed, 

• • costs and revenues are allocated to the entities that actually generate them or bear the economic risk. 

In this context, TP adjustments are a natural mechanism for aligning financial results with the arm’s length principle after the end of the tax year. 

Domestic obligations – transfer pricing adjustments in Poland 

Despite the existence of international guidelines, individual countries – including Poland – have introduced their own detailed conditions for the tax recognition of TP adjustments. 

Under Polish regulations, a taxpayer may recognise a transfer pricing adjustment for tax purposes provided that all of the following conditions are met: 

• • during the tax year, the terms of the transaction were set at arm’s length, 

• • a significant change in circumstances affecting those terms occurred, or the actually incurred costs or earned revenues are known, and aligning them with market conditions requires a TP adjustment, 

• • the taxpayer holds a statement from the related party or another accounting document confirming that the adjustment has been made in the same amount, 

• • there is a legal basis for the exchange of tax information with the country in which the counterparty to the transaction is established. 

In the case of upward adjustments (in plus), the legislator requires only the first two conditions to be met. 

It should be emphasised, however, that compliance with Polish regulations does not automatically guarantee acceptance of the adjustment in other jurisdictions. 

Jurisdictional differences – practical examples 

For example, under Romanian law – similarly to Poland – a TP adjustment should be allocated to the period to which it relates. In addition: 

• • it is necessary to demonstrate that the other party to the transaction has made an adjustment in the same amount, 

• • local accounting regulations require the adjustment to be recognised in the profit and loss account as part of the financial result. 

Outside Europe, detailed TP adjustment regulations exist, inter alia, in China, Singapore and Thailand, where tax authorities place strong emphasis on the economic justification of adjustments and their consistency with transfer pricing documentation. 

At the same time, there are jurisdictions in which there are no explicit regulations in this area (e.g. Angola or Malta), which may significantly hinder the implementation of symmetrical adjustments. 

Transfer pricing adjustments in the light of case law 

Despite their long-standing use in tax practice, TP adjustments remain a current subject of disputes and considerations in Polish case law. Courts and tax authorities analyse in particular the conditions for tax recognition of TP adjustments, their nature (ex ante vs ex post) and the timing of their recognition for tax purposes. The treatment of TP adjustments in other areas, such as VAT and customs duties, is also of importance. 

A key area of ongoing dispute remains the classification of a given adjustment – tax authorities examine whether a particular settlement constitutes a transfer pricing adjustment within the meaning of the regulations, or whether it should be settled under general rules. This confirms that TP adjustments continue to be an area of increased tax risk and require particular diligence on the part of taxpayers. Recent examples of interpretations issued in this area include: the interpretation of 13 February 2025, ref. no. 0111-KDIB1-1.4010.793.2024.2.MF, the individual interpretation of 22 January 2025, ref. no. 0111-KDIB1-1.4010.718.2024.1.MF, and the judgment of the Provincial Administrative Court (WSA) of 4 September 2025, I SA/Wr 175/25. 

In this area, case law from other jurisdictions and at the international level is also emerging, such as the judgment of the Court of Justice of the European Union (CJEU) of 4 September 2025 in the Acromet case (C-726/23), concerning the treatment of adjustments for VAT purposes. 

Another example is a Dutch ruling (Amsterdam Court of Appeal, Case No. 24/319), in which it was held that an ex post transfer pricing adjustment made by a distribution company should be included in the customs value of imported goods if it is directly related to those goods and affects their price. The court emphasised that the burden of proof that the adjustment should not increase the customs value rests with the taxpayer. This ruling demonstrates that TP adjustments may have consequences not only for income taxes, but also in the area of customs duties and border settlements. 

Summary 

Transfer pricing adjustments remain an area of high tax risk, particularly in international transactions. Their correct implementation requires not only knowledge of local regulations, but also consideration of international rules and the practice of foreign tax authorities and courts. 

Given the complexity of the issue, an individual analysis of each case is recommended, together with appropriate tax protection of TP adjustments from the perspective of both parties to the transaction, including securing the position through a tax ruling. 

If you: 

• • are planning a transfer pricing adjustment, 

• • wish to verify the correctness of adjustments already made, 

• • are facing divergent regulations in different jurisdictions, 

• • or wish to properly safeguard your transfer pricing settlements for the future, 

I invite you to contact me directly. We will be pleased to help assess the risks and select appropriate tax solutions – both from a local and an international perspective.