Transfer Pricing Compliance in Poland: Management Board Liability Moves to the Local File

The Polish transfer pricing compliance regulations impose on the taxpayers concluding related party transactions two types of the obligations. First, the taxpayers are obliged to prepare the Local File and eventually the Master File. The deadlines are 11 and 12 months respectively since the tax year’s end. The Local File and Maser File follow the OECD guidelines with respect to content. Second, the taxpayers are also obliged to file special transfer pricing report (TPR) summarizing key information on related party transactions.

Currently, the TPR form consists of the statement of the management board that the transfer pricing documentation for the given tax year has been prepared and all the transfer prices covered by the Local File are at arm’s length. The tax authorities assumes that only the management board is aware of all the business conditions and circumstances connected with the related party transactions and therefore the abovementioned statement may be issued only by the management board. Thus the TPR form may be filed only by the management board representative.

Proposed changes move the statement from the TPR report to the Local File. As a result TPR form would be filed as a regular tax declaration (similarly to yearly tax return) and no management board involvement would be needed. Same time as the management board statement will be a part of the Local File, the proposed regulations requires the Local File to be signed by the taxpayers’ management board.

The above has severe consequences for the taxpayers. One of possible option that may be imposed by the regulations is digital signature. Such signature contains time stamp. Therefore the tax authorities may be able to verify whether the Local File has been prepared on time. This may impact the processes where the local files are prepared by central transfer pricing teams and are delivered to the Polish entities to supplement or verify their content. If the new regulation come into force (it will cover 2026 and the following years) , the processes will need to be altered in such a way the final local file could be singed before the deadline. In case of noncompliance the new regulations assume penalties may be imposed on the management board members reaching even PLN 15M (EUR 3,5M).