Transfer pricing enforcement in Poland: what managers need to know

Transfer pricing in Poland has become a top enforcement priority for tax authorities. It’s no longer a box-ticking compliance formality-companies are facing robust scrutiny of related-party transactions, with significant financial and personal risks for managers who underestimate the requirements.

Polish tax authorities treat transfer pricing as a key tool for combating tax base erosion and profit-shifting among multinational groups. There has been a marked increase in targeted audits, data-driven risk profiling, and cross-border coordination-all making transfer pricing an area where non-compliance leads to serious consequences.
 
How is transfer pricing enforcement carried out in practice, and how can pitfalls be avoided?
 
The scope: what Polish tax authorities are looking for?
 
Businesses engaged in related-party transactions above legally defined thresholds must prepare detailed transfer pricing documentation and benchmarking analyses. This documentation supports that their intercompany dealings are conducted on an arm’s length basis.
 
Polish tax offices are authorized to question the declared income from related-party transactions if they determine that prices were not set according to the arm’s length principle. This may result in an enforced adjustment to taxable income and the imposition of additional tax liabilities.
 
Enforcement typically focuses on:
 

• Undocumented or insufficiently documented transactions, especially where thresholds are exceeded.
• Unjustified deviations from market-based pricing.
• Artificial ownership structures or informal influence that may constitute related-party control.

 
Risk triggers in practice
 
Audit selection is often driven by automated analysis and risk profiling. Some of the most common red flags include:
 

1. Transactions exceeding PLN 10 million or PLN 2 million: transfer pricing documentation is required in Poland for transactions between related parties if the value in a tax year exceeds:

 

2. Inconsistencies between TPR (Transfer Pricing Reporting) and reported CIT results. Anomalies or inconsistencies in the TPR forms compared to CIT filings can attract audit attention, as they indicate possible misstatements or transfer pricing concerns.

 

3. Lack of a benchmarking study, or the use of weak comparables. Regulatory expectations are for robust benchmarking analyses in transfer pricing documentation. The absence of benchmarking, or reliance on non-comparable benchmarks, is a frequent audit trigger.

 

4. Repeated dealings with loss-making entities. Continuous or repeated transactions with related parties that consistently report losses, without strong commercial justification, raise suspicion, as such patterns can suggest profit shifting or base erosion.

 

5. Cross-border transactions with low-tax jurisdictions. Deals with entities in tax havens or low-tax jurisdictions, especially those structured to minimize group tax liabilities, are heavily scrutinized by tax authorities.

 
In these situations, the burden shifts to the taxpayer to demonstrate that the pricing is at arm’s length.
 
Consequences of transfer pricing adjustments
 
Where an audit results in an adjustment, the tax authority may apply:
 

• The standard 19% corporate income tax (CIT) on the adjusted profit.
• An additional 10% penalty rate on the reassessed income.

 
This penalty may double to 20% if the adjustment exceeds PLN 15 million and transfer pricing documentation is not submitted. It may even triple to 30% if both conditions apply. These rates reflect how seriously transfer pricing compliance is now treated in Poland.
 
TPR form as a compliance trigger
 
The TPR report is more than just a filing requirement-it provides the tax office with a comprehensive audit roadmap. It includes:
 

• information on controlled and uncontrolled transactions,
• details of any corporate restructuring,
• data on joint ventures and limited partnerships,
• a confirmation statement that documentation is complete and that transactions meet market standards.

 
Errors, omissions, or inconsistencies in TPR filings are frequently used as entry points for audit inquiries.
 
Definition of related parties
 
A common problem in Polish audits is the frequent underestimation of what qualifies as a related party. Many taxpayers overlook factors such as:
 

• informal influence between entities,
• indirect or artificially structured ownership connections or
• control rights held without direct equity ownership.

 
This wider interpretation leads to some companies unintentionally entering into related-party transactions without being aware of the related compliance requirements.
 
Documentation isn’t enough without a good strategy
 
Even companies that prepare the required documentation are not immune. Tax authorities also assess:
 

• the quality and relevance of benchmarking studies,
• whether financial outcomes align with declared transfer pricing policies,
• how internal restructurings are reflected in pricing and reporting.

 
Merely checking the box on documentation will not protect against adjustments if the pricing itself is deemed unrealistic.
 
Audits are inevitable- the question is how to be well prepared
 
With increasingly sophisticated audit tools, Polish tax authorities are focusing on transfer pricing as a strategic enforcement area. Companies that treat transfer pricing compliance as a once-a-year formality may find themselves exposed to audits, adjustments, and significant penalties.
Managers in businesses engaged in related-party transactions above legally defined thresholds should regularly review their pricing strategies and treat the TPR form as a serious compliance tool-not just a formality. In today’s environment, transfer pricing risk management is not about avoiding scrutiny, but about being ready for it.
 
Conclusions
 
It is crucial for managers of businesses engaged in related-party transactions to be aware of transfer pricing requirements. Companies in Poland are required to prepare detailed transfer pricing documentation and benchmarking analyses, which must demonstrate that their intercompany transactions are conducted at arm’s length. Additionally, they must submit the Transfer Pricing Reporting (TPR) form and declare the pricing mechanisms used between the parent company and its subsidiaries. Non-compliance can result in significant financial penalties and an increased risk of audit.
 
Woźniak Legal (www.wozniaklegal.com) possesses the expertise and experience necessary to effectively assist you. Our lawyers can assist you in drafting the transfer pricing documentation and preparing TPR form.
Please contact us on office@wozniaklegal.com.
You can also email me directly on grzegorz.wozniak@wozniaklegal.com