When is a transfer pricing adjustment possible?

In the regulations is lack a definition of a transfer pricing adjustment (TP adjustment). However, it can be concluded based on the Clarifications of the Ministry of Finance that the purpose of a TP adjustment is to adjust (correct, amend) a transfer price to the level in line with the arm’s length principle in a given period.

TP adjustment can be made if arm’s length transaction terms were agreed as at the date of making a transaction with a related party, including in particular a price, which – for various reasons – became non-arm’s length later.

The TP adjustment can be made in plus or in minus, i.e. respectively:

  • increase the financial result by increasing revenues or reducing costs, or
  • reduce the financial result by lowering revenues or increasing costs.

TP adjustments – how often?

Unfortunately, the CIT Act does not specify when and for what period they should be made. It only indicates that it should be performed with the frequency with which it would be made by third parties under comparable conditions, taking into account the actual course and circumstances of the making and execution of the controlled transaction and the behavior of the transacting parties.

Therefore, please take a case-by-case approach to decide whether adjustments should be made on a monthly, quarterly or annual basis.

When the TP adjustment can be recognized in income/expenses?

With the amendment in place, starting January 1, 2022, in order to safely recognize the TP adjustment as tax income/costs, you must fulfill a total of:

  • Four conditions in the case of an in minus TP adjustment (it was 5 conditions until December 31, 2021), and
  • Two conditions in the case of an in plus TP adjustment.

Conditions to be met both for in plus and in minus TP adjustments:

  • Condition 1: Conditions during the fiscal year determined in accordance with the arm’s length principle
  • Condition 2: Change in significant circumstances during the fiscal year.

Conditions to be met only in the case of an in minus adjustment:

  • Condition 3: A related party’s statement or accounting evidence confirming that the related party has made transfer pricing adjustments in the same amount as the taxpayer;
  • Condition 4: Legal basis for information exchange.

TP adjustments raise doubts

Despite the interpretation and explanations from the Ministry of Finance, transfer pricing adjustments still raise doubts among taxpayers. Identifying whether a given condition has been met is not always obvious in practical terms.

Failure to meet even one of the conditions set forth in Article 11e of the CIT Act means the TP adjustment may not be recognized as tax income / cost. Please note it is not enough to analyze the adjustments only from the perspective of transfer pricing. The matter is always related to VAT (and the need to decide which document should be underlying the adjustment) and customs duties (primarily in the case of adjustments in relation to goods transactions outside the EU).


In the MDDP blog ‘Trochę o powiązaniach’ you will soon find more entries focusing on individual conditions for making TP adjustments.


Marta Klepacz

Senior Manager, Transfer Pricing Practice

Tel.: (+48) 533 889 036