Ministry of Finance informs that for the purposes of simplification of the safe harpour type in the year 2020 the previous notice of the type of base interest rate and margin is used from 21 December 2018
Following the amendment of the transfer pricing rules, 1 January 2019 taxpayers (under certain conditions) [1] ) may benefit from the simplification of the Safe Harbour type for controlled transactions covering certain loans (and bond lending and issuance respectively).
The application of this simplification results in:
- • no obligation for the taxpayer to prepare a comparative analysis / description of compliance for a controlled transaction covered by a safe Harbour ,
- • deviation of the tax authority from determining the income/loss of the taxpayer in terms of the interest rate of such a transaction.
Notice as part of the regulation
one the conditions which must be met in order to benefit from simplification are to determine the interest rate on the loan (loans or bonds respectively) on the basis of the base interest rate and margin announced by the Minister of Finance in the notice.
first such notice was published in the Polish Monitor notice of the Minister of Finance dated 21 December 2018 on the announcement of the type of base rate and the margin for transfer pricing for personal and corporate income tax (M. P. of 2018 item 1286) ‘Notice from 21 December 2018”). The type of base interest rate and margin announced in this notice shall apply from 1 January 2019
According to the statutory delegation, the Minister of Finance announces a type of base rate and margin, for the purposes of Safe Harbour regulations, not less than once a year [2] .
Since the obligation laid down in the delegation was In 2019 made (i.e. the type of base rate and margin were announced from 1 January 2019), the time limit for issuing the next notice shall expire 31 December 2020
As a consequence, the notice of 21 December 2018 also valid In 2020 (until the new notice is issued), which means that for the sake of simplification, taxpayers use the type of base interest rate and margin announced in the notice with 21 December 2018 also for loan agreements (debts and bonds issued respectively) In 2020
[1] These conditions are defined under Article 11g(1) Corporate Income Tax Act (Journal of Laws of 2019, item 865, as amended) and, respectively, under Article 23s(1) Personal Income Tax Act (Journal of Laws of 2019, item 1387, as amended)
[2] Article 11g(4) Corporate Income Tax Act (Journal of Laws of 2019, item 865, as amended) and, respectively, Article 23s(4) Personal Income Tax Act (Journal of Laws of 2019, item 1387, as amended)
On this occasion, it is worth mentioning that the rates announced by the MF are used only for the purposes of the harps. The Notice is not a source of information for benchmarking.
Legal basis
- Article 11g Corporate Income Tax Act (Journal of Laws of 2019, item 865, as amended) and, respectively, Article 23s Personal Income Tax Act (Journal of Laws of 2019, item 1387, as amended)
- Notice of the Minister of Finance dated 21 December 2018 on the announcement of the type of base rate and the margin for transfer pricing for personal and corporate income tax (M. P. of 2018 item 1286)