This is to let you know that the Finance Minister issued an official notice on 27 December 2023 setting out the base rate and margin for transfer pricing purposes in personal income tax and corporate income tax. The notice took effect on 1 January 2024.
This document is of key importance for the applicability of the so-called safe harbours for controlled transactions involving loans. If safe harbour applies, the tax authorities will not assess taxpayer’s income (loss) relating to the loan interest rate. In addition, controlled loan transactions falling within safe harbour provisions are exempt from the transfer pricing documentation requirement.
Safe harbour regulations apply to an intercompany loan if all of the following conditions are satisfied:
- the per annum interest rate on the loan as at the contract date is determined on the basis of such base rate and margin as laid down in the Finance Minister’s notice applicable on the contract date;
- other than interest, no charges related to the grant or servicing of the loan (such as commissions or fees) are payable;
- the loan has a maturity of no more than five years;
- the total principal amount of intercompany loans repayable to (for loans granted) or by (for loans received) the party is no more than PLN 20 million (or equivalent in other currency), respectively, in a year;
- the lender is not an entity that is established, resides or has its place of management in a tax haven.
In the new notice, the Finance Minister declared:
- a maximum margin for the borrower of 3.1% (formerly 2.9%),
- a minimum margin for the lender of 2.2% (formerly 2.4%),
- the following base rates for loans:
- PLN – WIBOR 3M or WIRON 3M Compound Rate;
- USD – 90-day Average SOFR or LIBOR USD 3M (for loans granted before 1 January 2022);
- EUR – EURIBOR 3M;
- CHF – SARON 3 months Compound Rate;
- GBP – SONIA 3M Compound Rate or LIBOR GBP 3M (for loans granted before 1 January 2022).
If any of the base rates is below zero in any period, interest shall be calculated using this base rate equal to zero.
Note that use of safe harbours triggers MDR duties.
If this issue pertains to your business and you are interested in our assistance, please contact us.
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