Transfer Pricing Adjustments: Safely Restoring Arm’s Length Conditions in Controlled Transactions

• Transfer pricing (TP) adjustments, introduced in Poland in 2019, help ensure related-party transactions comply with the arm’s length principle.
• External factors like interest rate changes, currency volatility, commodity price fluctuations, and geopolitical events can cause deviations from arm’s length conditions.
• TP adjustments allow taxpayers to restore arm’s length conditions and avoid tax risks, but must meet four conditions set out in Article 11e of the CIT Act.
• These conditions include initial arm’s length terms, significant changes in circumstances, mutual confirmation of adjustments, and a legal basis for tax information exchange.
• TP adjustments are only allowed if the original transaction was arm’s length at the planning stage.

Source: mddp.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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