Local file guide

On 1 January 2019 new transfer pricing regulations came into force. Get familiar with the changes and see which regulations apply to transactions carried out in 2018.

Local file – transactional thresholds

Prior to the changes, the taxpayers were obliged to prepare documentation if their revenues or costs in the preceding tax year exceeded EUR 2 million. As a result of an amendment only the value of transaction with the related entity is decisive. The new thresholds are:

10 million – for transactions (purchase/sale) involving goods (eg wares, fixed assets) and financial transaction (eg loan, guarantee);

2 million – for services, transactions involving intangible properties and other transactions.

Many transactions are exempt from documentary obligations. Related entities do not need to prepare documentation, if:

both parties to the transaction have a registered office, management or residence in Poland;

neither party benefit from tax exemptions (eg operates within the special economic zone);

neither party reported tax loss in the year in which transaction has been carried out.

Master file

A Master file have to be prepared by related members of the group having a total consolidated revenue exceeded PLN 200,000,000 in the previous fiscal year.

Taxpayers may also use Master file prepared by another member of the group. Documentation may also be submitted to tax office in English.

Which regulations apply to transactions carried out in 2018?

As a general rule, the documentation for 2018 should be prepared in accordance with the previous regulations (in force till 31 December 2018). Nevertheless new rules (including increased transactional thresholds and new exemptions) may be applied to transactions carried out in 2018 – depending on the taxpayer’s choice. Once the applicable regulations are chosen, these regulations should be applied consistently to all transactions carried out in 2018. The choice made by taxpayer may therefore lead to a significant reduction of documentary obligations:


In 2018 A sp. z o.o. has carried out three transactions with a related party with registered office outside Poland:

1) sale of goods worth PLN 5 million;

2) granting a loan worth PLN 1 million;

3) providing services worth PLN 3 million.

In 2017 revenue of A amounted to EUR 9 million. According to the previous regulations transactional threshold was therefore 85,000 euro (about PLN 355 000).

Under the previous regulation, A would be required to prepare local file for all (3) listed above transactions. A, however, can decide to prepare documentation based on the new regulations. As a result of applying new transactional thresholds, A will be required to prepare local file for only one transaction (services worth PLN 3 million).

The choice of the applicable regulations – pros and cons

In most cases the application of the new thresholds lead to a reduction of documentary obligations (especially for small and medium-sized entities). It may, therefore, seem obvious that all taxpayers will decide to apply the new regulations to transactions made in 2018. When making choice, however, it is worth considering that according to the new provisions:

benchmarking study is obligatory for all taxpayers who are required to prepare local file;

taxpayers are required to submit an additional statement in which they confirm that the transactions comply with the arm’s length principle.

A sp. z o.o. from the example above (Which regulations apply to transactions carried out in 2018?) will reduce the amount of local files to be prepared. However, A sp. z o.o. will be obliged to prepare a benchmarking study (despite the fact that it had not previously had to do so) and to submit an additional statement.

When to submit a statement on the preparation of transfer pricing documentation?

The deadline for filing a statement on preparation of documentation has not been changed. The statement should be submitted by the end of the ninth month after the end of the tax year. For taxpayers whose financial year coincides with the calendar year, the deadline is therefore 30 September 2019.

Safe harbours

Taxpayers may reduce their documentary obligations by using simplified rules for determining transfer price (so-called safe harbours). Price set in accordance with safe harbor regime is considered market price (so it gives protection against tax penalties). Under the safe harbour regime there is also no need to prepare benchmarking study. Safe harbour regime covers two types of transactions: loans and low value adding services.


Simplified rules for determining transfer price apply to a loan meeting the following criteria:

the interest rate is determined on the basis of interest rate and the margin specified in the announcement of the Minister of Finance;

there are no additional fees, commissions and bonuses other than interest;

the loan period is no longer than 5 years;

the total value of loans obtained or granted from/to related party does not exceed PLN 20,000,000

the lender has no registered office, place of residence or management board in the country that use harmful tax competition (tax haven).

Low value adding services

Safe harbours cover low value adding services meeting the following criteria:

the mark-up on the costs of these services has been determined by the cost plus method or transactional net margin method, and markup percentage is:

a. no more than 5% – for the purchased services

b. no less than 5% – for the provided services

service provider has no registered office, place of residence or management board in the country that use harmful tax competition (tax haven);

service recipient has prepared the calculation of costs involved (and the application of the allocation keys)

the services are of a supportive nature and are not part of the core businesses of the related parties

the value of the services provided to unrelated parties does not exceed 2% of the value of these services provided to related and unrelated entities;

the services not subject to further resale

Penalties related to non-market price and failure to submit tax documentation

From 1 January 2019, the 50% penalty tax rate for not submitting tax documentation ceases to apply. Tax surcharges are now regulated in Chapter 6a of the Tax Ordinance.

Surcharge at the rate of 10% is levied on taxpayers if the transfer price differs from market price. Additional tax is levied whether or not the taxpayer submitted the tax documentation. Tax penalty rate may be doubled (20%) – as a consequence of not submitting tax documentation, or even tripled (30%) – in cases specified in the Act.


Information about transactions made with related parties shall be provide in a new form TP-R.