This is to alert you to the published announcement of the Minister of Finance, Funds and Regional Policy dated 17 December 2020 on the base rate and margin notice for transfer pricing purposes in personal income tax and corporate income tax (“Announcement”).
In accordance with the Announcement, as of 1 January 2021, the margin above the base rate (three-month WIBOR, EURIBOR, LIBOR USD, LIBOR CHF or LIBOR GBP) for the purposes of safe harbour provisions for loans, credit facilities and bonds is 2.00% at the minimum for the lender and 2.30% at the maximum for the borrower. The margin was 2.00% in 2019 and 2020.
A memorandum in support of the Announcement explains that the change has been driven by:
- stricter credit policies on the market,
- the desire to add flexibility to the safe harbour mechanism in times of the coronavirus pandemic,
- the desire to reduce administrative and bureaucratic burdens.
Safe harbour provisions have been available since 2019 for intercompany loans, credit facilities and bonds (collectively, “loans”) which meet all of the following requirements:
1. the 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 announcement applicable on the contract date;
2. other than interest, no charges related to the grant or servicing of the loan (such as commissions or fees) are payable;
3. the loan has a maturity of no more than five years;
4. 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 financial year;
5. the lender is not an entity that is established, resides or has its place of management in a tax haven.
For the full text of the Announcement and the explanatory memorandum (in Polish), see here:
If this issue pertains to your business and you are interested in our assistance, please contact your WTS&SAJA consultant.
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