What not to forget when filling out the TPR for 2022?

Although the deadlines for filing the transfer pricing information (TPR) form for 2022 are to be extended by 3 additional months, many taxpayers have decided to file it by the original deadline. In addition to the information on these transactions, however, there are a few additional issues that should not be forgotten when filling out the form.

Documented transactions are not everything

All taxpayers will probably remember to fill in the required information in their TPRs about the transactions for which they have prepared Local File documentation. However, these are not the only transactions that should be included in this year’s form.

Along with the TPR, a number of transfer pricing regulations have been amended, effective as early as January 1, 2022. Among other things, the amendment introduced new exemptions from preparing Local File documentation, but the legislator did not at the same time waive the obligation to report them in TPR – albeit in a simplified form. Such transactions, which received a full exemption from the preparation of Local File, while simplified reporting in TPR, include transactions benefiting from the so-called safe harbor mechanism and the so-called pure re-invoicing. The issue of simplified reporting of domestic transactions subject to exemption from documentation obligations remained unchanged.

In practice, this means that taxpayers, when filling out their TPR forms for 2022, should go back to the findings and conclusions they had when determining their transfer pricing obligations for that year. This is because there should be information there about transactions that exceeded the value thresholds set by the regulations, but could benefit from the exemption in question.

Simplified reporting, or what kind of reporting?

The specific way in which transactions using exemptions are reported in the TPR depends in each case on the type of particular exemption the taxpayer wants to use. If he has specified that a given transaction may be subject to even several exemptions (e.g., an exemption for domestic transactions and a safe harbor exemption), he should decide which ones and in what order they will actually be used (the form allows, for example, the use of the domestic exemption when filing safe harbor exempt transactions and pure re-invoice transactions, but not vice versa). Below we briefly summarize the differences in the reporting of transactions exempted from the preparation of Local File on the basis of the 3 most popular exemptions (their full catalog is much broader).

Domestic transactions

Transactions benefiting from the so-called domestic exemption are reported in the TPR according to their type (they can appear in both A, C and E category groups). The information that they enjoy an exemption under a particular provision should be marked only after filling in basic data, such as the category of the transaction, value, possible transfer pricing adjustment, profitability offset, and others appropriate to the type of transaction. The rest of the information (derived from, among other things, transfer pricing analysis) does not apply to the reporting of these transactions.

Safe harbour

If a taxpayer wants to report transactions that benefit from the safe harbor mechanism, it should first select the appropriate group of transaction categories (group B for low-value-added services and D for financial transactions). The basic information about the transactions to be completed will differ depending on whether we report services or financial transactions. However, in both cases it will not be necessary to provide detailed information, such as from a transfer pricing analysis.

Pure re-invoicing

This year’s TPR form includes an additional group of transaction categories, Group F, specifically designed for refactoring transactions that may benefit from the Local File exemption. The scope of mandatory information completed for these transactions is the smallest compared to the other exemptions and includes only:

  • transaction category,
  • its value,
  • conduct transfer pricing adjustments
  • the use of profitability offsets and
  • the country of the counterparty and the value of the transaction per country.

We have already described the listed exemptions and many others in our publications (link here), so we encourage you to read on if you want to know the details.

Natalia Rutkowska

Manager, Transfer Pricing Team

Tel.: +48 503 973 338