Pressfoto pl.freepik.com The Ministry of Finance has published statistics on the procedures for concluding prior price agreements covering the period from first agreements to half 2020.
After the failure of the project providing for an agreement in a simplified procedure to be faster, cheaper and more efficient, the number of open procedures in the standard procedure increased significantly.
The reason for this is that the simplified APA project provided for the possibility to transfer the already submitted proposal on a basic basis for further consideration in the simplified price agreement.
Therefore, in space 2018 and 2019 The number of requests for prior price agreement has increased considerably – year 2019 was absolutely record in this respect – during one year went to MF until 192 requests for a price agreement.
This is more than twice as much as in 2018 (98 applications) and seven times the average number of applications from 2006 (The mean is approx. 27 applications for one year). The situation of such a dynamic increase in interest in obtaining an agreement has translated into statistics currently presented by the Ministry.
At the moment before the Head of the National Tax Administration in progress are 333 open procedures for obtaining a price agreement (the vast majority of these cases - 304 procedure – concerns the possibility of a unilateral price agreement).
The figures above are much lower in relation to the cases where price agreements were finally concluded. From 2006 half 2020 total 87 price agreements, half of which (43 agreements) was finalised in years 2017-2020. Most agreements in space one the year was concluded last year – in 2019 was it 15 agreements. This year the dynamics remains similar – in first mid-year is this 7 the agreements concluded.[1]
Prior price agreement may be concluded for a maximum period 5 tax years, the procedure for its conclusion should be completed within the time limit 6 months (unilateral) 12 months (bilateral) or 18 months (multilateral) and the cost of the procedure may range from 5,000 PLN to 200,000 PLN. The prior price agreement may relate to the period from the beginning of the tax year of the applicant in which the application was made.[2]
In the context of the above deadlines, statistics on the actual duration of the agreement procedure are interesting, with an average deadline of:
- 11 months for unilateral agreements;
- 30 months for bilateral agreements;
- 35 months in the case of multilateral agreements.
The above values mean that in the case of these simpler situations taxpayers must count with a real waiting time of about 1 year, for those more difficult – about 3 years. Of course, these are average values, and so there are cases where this time can be both much shorter and much longer.
The Ministry also presented data on the types of transactions already covered by the agreements and the methods used in those agreements. This information shows that the vast majority of the agreements concern the sale of tangible goods (to Poland or outside Poland) and the most common method is the net transaction margin method.
What is the basic benefit of the price agreement? It can be pointed out that the key to taxpayers are 2 aspects.
After first during the period of validity of the decision on the agreement, the tax authority will not determine (estimated – ed.) the tax liability under the income tax laws, in so far as the income shown by the taxpayer has been determined in accordance with the agreement concluded.
After second for transactions covered by a prior price agreement decision, the taxpayer is not required to draw up local tax records.
At the moment, the proceedings are neither particularly simple nor extremely efficient, but in the case of long-term transactions with a large volume and value but also a certain level of predictability, a prior price agreement is a solution worth considering due to the high level of tax security that can be achieved.
[1] Reference to statistical information published by MF: https://www.podatki.gov.pl/ceny-transferowe/procedury-map-i-apa-statystyki/uprzednie-porozumienia-cenowe-apa/statystyki/
[2] Act dated 16 October 2019 settlement of double taxation disputes and the conclusion of prior price agreements, Journal of Laws of 2019, item 2200.
Author:
Leszek Dutkiewicz, partner Russell Bedford Poland. Associated with the company from 2011. Director of RBP office in Katowice. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.
He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices. Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.