Navigating Transfer Pricing Risks and Unlocking Opportunities in Poland

Transfer Pricing has recently moved into the spotlight of Polish tax policy. The National Revenue Administration in Poland (KAS) has achieved notable growth in the effectiveness of audits over the past few years. Between 2020 and 2024, the effectiveness of audits (in percentage terms) has more than doubled, considering the data both for tax audits as well as customs and tax audits. More importantly, the percentage of Transfer Pricing audits (tax audits) that ended with assessment of the tax payer’s additional income in 2023 was 23 %, while in 2024 – it reached a massive 70 %.

To manage these risk, Norwegian entities operating in Poland must ensure especially that Local File (including Transfer Pricing analyses) and Master File are properly prepared, up-to-date, and consistent with the broader group-level strategy.

In light of the Polish Transfer Pricing regulations, Local File is required for transactions between related entities that exceed the following thresholds in a tax year:

• PLN 10,000,000 – for the sale or purchase of goods
• PLN 10,000,000 – for financial transactions
• PLN 2,000,000 – for service transactions and other types of transactions

For transactions involving entities located in so-called “tax havens”, the documentation thresholds are significantly lower:

• PLN 2,500,000 – for financial transactions;
• PLN 500,000 – for transactions other than financial transactions.

If an entity meets the above mentioned conditions, it must, in principle:

• Prepare Local File, including Transfer Pricing analyses* – by the end of the 10th month following the end of the tax year;
• Submit the TPR information to the Polish tax authorities – by the end of the 11th month following the tax year.

*Transfer Pricing analysis needs to be updated at least every 3 years, unless a change in the economic environment significantly affecting the analysis prepared justifies an update in the year in which such change occurs.

Moreover, entities belonging to groups with a consolidated turnover exceeding PLN 200 million in the previous fiscal year must prepare a Master File, which provides a broader overview of the group’s Transfer Pricing policies. The deadline for attaching the Master File to the Local File is 12 months after the end of the tax year.

Failing to meet the above Transfer Pricing obligations can lead to severe financial consequences. If the Polish tax authorities determine that a tax payer has not adhered to the arm’s length principle, they may impose adjustments to taxable income and additional tax liabilities.

Consequently, the difference between the taxpayer-determined income and the adjusted taxable profits is subject to an additional tax rate:

• Standard 19 % corporate tax rate applies to reassessed taxable income
• An additional 10% penalty tax rate may be imposed on the reassessed income

In certain cases, the penalty tax rate may increase:

• 20 % – in the event of failure to submit Transfer Pricing documentation (or submission of incomplete Transfer Pricing documentation) or if the basis of the additional tax liability exceeds the amount of PLN 15 million – in respect of the excess over that amount
• 30 % – in the event of failure to submit Transfer Pricing documentation when, at the same time, the value of the basis for determining the additional tax liability exceeds PLN 15 million

Additionally, the following penalties under the Fiscal Penal Code (KKS) must be considered:

• Failure to prepare Local File, providing Transfer Pricing documentation inconsistent with actual transaction details or failing to attach the required Master File can result in fines of up to 720 daily rates (currently approx. PLN 44 million)
• Late preparation of Transfer Pricing documentation may result in fines of up to 240 daily rates (currently approx. PLN 14 million)
• Failure to submit the TPR information or providing data inconsistent with Local File or actual transaction details can result in fines of up to 720 daily rates (currently approx. PLN 44 million);
• Late submission of the TPR information may result in fines of up to 240 daily rates (currently approx. PLN 14 million)

Given the current obligations and potential sanctions, simply “ticking the box” with Transfer Pricing documentation is no longer sufficient. Documentation must be robust, accurate, and defensible in the event of an audit. Norwegian-based multinational groups with operations or affiliates in Poland should therefore view Transfer Pricing documentation not just as a compliance requirement, but as a critical safeguard against financial and reputational exposure.

Misalignments between Norwegian and Polish Transfer Pricing documentation are common. For instance, a Norwegian entity might describe a transaction as routine distribution, while the Polish counterparty identifies entrepreneurial risk-taking. Such discrepancies raise “red flags” with the tax authorities. Consistent functional analysis is not just best practice – it is essential. Local File should comply with local regulations and also reflect the group’s Master File, strategy, and policies. Ensuring cross-border coherence helps mitigate Transfer Pricing risks and strengthens your overall defensibility.

Currently, the TPR information (form) has become the focal point of Transfer Pricing obligations in Poland. As the analytical capabilities of KAS develop, the TPR form is increasingly used not only for data collection, but also for selecting entities for audits. Data submitted via the TPR-C form already informs these processes. While many taxpayers treat the TPR form as just another formal duty, for the authorities it is an invaluable source of detailed information, revealing sensitive aspects such as Transfer Pricing analyses, price adjustments, and profitability on transactions with related parties. Neglecting the TPR form can inadvertently highlight weaknesses and attract scrutiny.

There is therefore no doubt that adopting a proactive approach to fulfilling Transfer Pricing obligations and putting appropriate safeguards in place well in advance is far preferable to relying on sheer luck for a favorable outcome from an imminent audit. Such approach allows for the early identification of key risks and the development of effective strategies to manage them.

For these reasons, it is crucial to work with experts who understand the nuances of functional profiles, value chains, and business models, and who can align documentation strategies across multiple jurisdictions. KPMG’s specialists have extensive experience in cross-border documentation and inter-firm alignment. Reach out to our team to ensure your Transfer Pricing documentation is not only compliant, but also consistent, strategically sound, and fully defensible.

Make room in your calendar on October 6th. If you are interested in taking a deep dive into the Polish Transfer Pricing atmosphere, thenyou do not want to miss this!