The Finance Ministry published an announcement dated 21 Dec 2021 on the base rate and margin notice for transfer pricing purposes in personal income tax (PIT) and corporate income tax (CIT). The announcement came into force on 1 January 2022.
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 requirement of providing a comparability analysis (under law applicable in 2021), or
- the requirement of issuing a local file for this transaction (under law applicable in 2022).
Safe harbour regulations apply to an intercompany loan if all of the following conditions are satisfied:
- 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;
- 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 announcement, the Finance Minister declared:
- a maximum margin for the borrower of 2.8% (formerly 2.3%),
- a minimum margin for the lender of 2.0% (no changes),
- the following base rates for loans:
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- PLN – WIBOR 3M;
- USD – SOFR 3M Compound Rate or LIBOR USD 3M (for loans granted before 1 January 2022);
- EUR – EURIBOR 3M;
- CHF – SARON 3M 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 these issues pertain to your business and you are interested in our assistance, please contact us.
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