Last month the Finance Ministry posted a report on its website summarising eighteen years of the Polish APA legislation.

The report, entitled “Advance pricing agreements in Poland – a statistical report from National Revenue Administration 2006 – 2023”, is divided into three parts:

  • part one concerns the period from 2006 to 2017, when APA jurisdiction was vested in the Finance Minister;
  • part two relates to the period from 2018 onwards, when APA jurisdiction has been in the hands of the Head of National Revenue Administration;
  • part three provides background information on advance pricing agreements and about the Transfer Pricing Team in the Key Taxes Department of the Finance Ministry.

There were 90 APA applications filed between 2006 and 2017, and nearly 700 filed between 2018 and 2023 (half of them were made in 2019 after transactions covered by APAs were allowed to be excluded from the tax cost limitations under Article 15e of the Corporate Income Tax Act). After this regulation was repealed, APA interest continues to be on the increase, with more than 111 applications being filed annually during the period concerned on average.

Nearly 90% of the applications filed from 2018 to 2023 were involved unilateral APAs. During that time, the Head of NRA issued over 350 APAs (including 27 refusals) and close to 60 other rulings dispositive of APA cases. In total, the six years saw 411 APA cases having been concluded, with 90% of the APAs issued being unilateral (319 out of 353), among which foreign unilateral APAs prevailed (275).

The APAs issued between 2018 and 2023 were predominantly concerned with purchases of services by domestic entities (65.2%) or provision of services by domestic entities (10.5%). As in the prior period, the transactional net margin method prevailed, being used in more than 70% of the APAs. In accordance with statistics based on 387 APAs issued from 1 Jan 2020 to 30 Jun 2024, the chosen profit level indicators had the following ranges:

  • operating mark-up: from 1.5% to 16.71%,
  • operating margin: from 1.21% to 6.5%,
  • sales commission: from 0.5% to 5%.

Out of 280 APA cases pending in early 2024, 225 concerned unilateral APAs, 54 were about bilateral ones, and one involved a multilateral arrangement.

As a refresher, an advance pricing agreement (APA) is a tax risk management tool designed to prevent disputes with tax authorities concerning transfer prices and intercompany billing. Such agreements give taxpayers an assurance that their transfer prices will not be questioned by revenue administration.

If this issue pertains to your business and you are interested in our assistance, please contact us.

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