Goods, services, financial or other settlements take place between related parties – on both the sales and the purchase side. We analyse the terms of transactions and the method of determining remuneration and assess their compliance with the arm's length principle.
TAX ADVISORY
Transfer pricing
Transactions between related parties require terms to be set that correspond to the nature of the cooperation and the arm's length principle. Both the method of calculating remuneration and the actual course of the transaction and the role of individual entities matter.
We advise companies and capital groups on creating and verifying the principles of intra-group settlements. We develop transfer pricing policies, analyse transactions, prepare benchmarking analyses and support changes to settlement models.
We also handle cases in which the tax authorities challenge the transfer prices applied or the terms of transactions.
Damian Kuszewski
Tax consultant
Lead consultant for transfer pricing
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Tax advisers and attorneys-at-law
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70+ specialists
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Tax · Law · Audit · Accounting
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Warsaw · Katowice · Bydgoszcz
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STARTING POINT
What is your situation?
The scope of support needed depends on the type of transaction, the structure of the group and the way settlements are currently determined.
APPROACH
What does transfer pricing advisory involve?
The starting point is to establish how transactions between related parties actually take place and how remuneration is determined.
We analyse contracts, the settlement model, financial data and the economic conditions of cooperation. We check whether the settlement method corresponds to the actual course of the transaction and whether it is justified by market conditions.
On this basis, we assess the current solutions or prepare principles to be applied to new transactions.
The project may concern a single transaction, a selected type of settlement or the entire transfer pricing policy of the group.
SCOPE OF SUPPORT
Scope of transfer pricing advisory
Transfer pricing policy
We develop and update the principles of settlements between related parties. We determine the method of calculating remuneration for recurring transactions and the principles of their periodic verification.
Analysis of transactions between related parties
We examine the type and terms of the transaction, the manner of its settlement and the data on which the established remuneration was based. We assess the compliance of the adopted principles with the nature of the business activity.
Selection and verification of transfer pricing methods
We analyse the method of determining or verifying the transfer price and assess whether it corresponds to the specifics of the given transaction. Where necessary, we prepare the argumentation justifying the method applied.
Benchmarking and compliance analyses
We prepare analyses used to assess the market nature of transactions. The study may concern, among others, the price level, margin, profitability, interest rate or another parameter appropriate for the given settlement.
Changes to the settlement model
We support capital groups in changes to the principles of cooperation between companies. We analyse the impact of the changes on the method of remuneration and tax settlements.
Transfer pricing adjustments
We assess the method of settling the adjustment and its compliance with the adopted transfer pricing model and the actual course of the transaction.
Transfer pricing documentation and TPR
We determine the scope of documentation and reporting obligations and their connection with the adopted settlement model.
Audits and tax proceedings
We analyse the areas challenged by the authority, prepare explanations and argumentation and support the client at subsequent stages of the audit and proceedings.
Related parties and controlled transactions
The assessment of transfer prices begins with establishing what relationships exist between the entities and which settlements require analysis.
Transactions with related parties may concern both the sales and the purchase side – including, among others, the sale and purchase of goods, the provision and acquisition of services, financing, the use of intangible assets, lease, cost settlements and other benefits provided within the group.
The content of the contract alone does not give a complete picture of the transaction. It is also necessary to take into account how the cooperation looks in reality and on what basis the remuneration was determined.
In capital groups, the consistency of the principles applied by individual companies is important. Discrepancies between contracts, documentation, financial data and the actual method of settlement increase tax risk.
How do we verify the arm's length nature of settlements?
The analysis begins with a precise definition of the transaction and the terms of cooperation between its parties.
We then assess how the remuneration is determined and select the appropriate method for its verification. Where justified, we use comparative data allowing the terms of the transaction to be related to the terms applied between independent parties.
We compare the results with the contracts, financial data and the actual manner in which the transaction is settled.
If the business model or the manner of settlement changes, the earlier assumptions may need to be re-verified.
SETTLEMENT RULES
Transfer pricing policy
A transfer pricing policy organises the manner of settlement applied within a capital group.
It may set out the rules for particular types of transaction, the method of calculating remuneration, the methods applied and the manner of periodic review of the adopted parameters.
When preparing it, we analyse in particular:
- the types of transaction occurring within the group
- the roles of the individual entities
- the manner of determining remuneration
- the data used in the calculation
- the manner of verifying the prices or margins applied
- the rules for making adjustments
- the consistency of the adopted rules with the documentation and settlements
The policy should correspond to how the group actually conducts its business. If the manner in which the enterprise operates changes, the settlement rules should also be reviewed.
OBLIGATIONS
Transfer pricing documentation and TPR
Transfer pricing documentation describes the transaction and the adopted rules for its settlement. It should be consistent with the contracts, financial data and the actual course of cooperation between the entities.
Local File
local transfer pricing documentation
Master File
group transfer pricing documentation
Benchmarking analysis or compliance analysis
TPR information
Before commencing work, we determine the scope of the documentation obligations, check the available exemptions and the scope of data needed to prepare the documentation.
AUDIT
Transfer pricing audit
In the course of an audit, the authority may analyse how the terms of transactions between related entities were determined and their consistency with the documentation and financial data presented.
We support clients from the moment of the first request. We analyse the documents and the manner in which the transaction is settled, and we prepare explanations, evidentiary motions and arguments concerning the methods and terms of the transaction adopted.
If the case moves to a further stage, we also represent the client in tax proceedings and in the subsequent dispute with the authority.
When preparing the policy, analyses and documentation, we take into account the possibility of a later audit of the solutions adopted.
LIABILITY
Criminal fiscal liability and transfer pricing
The consequences do not end with an additional tax payment.
Irregularities in transfer pricing may also entail criminal fiscal liability. This applies in particular to breaches connected with the obligation to prepare transfer pricing documentation and with the TPR information, including cases where the required documents or information are not prepared or filed, are prepared after the deadline, or contain data inconsistent with the actual state of affairs.
Therefore, when assessing risk, it is important not only whether the company holds the required documents, but also whether the information presented in them corresponds to the actual terms of cooperation, the financial data and the manner in which the transaction is settled.
If the case involves a risk of criminal fiscal liability, we analyse it separately and coordinate tax measures with the legal support appropriate to the given case.
TIMING
When is it worth verifying transfer pricing?
Not every analysis results from an obligation to prepare documentation. Verification is particularly important when:
- 01the company enters into new transactions with a related entity
- 02the manner of determining remuneration between companies changes
- 03the group introduces a new settlement policy
- 04the business model of one or several companies changes
- 05the actual settlement results deviate from the earlier assumptions
- 06a reorganisation of the business is planned
- 07transfer pricing documentation or TPR information needs to be prepared
- 08an audit concerning intra-group settlements begins
The terms of a transaction are easier to organise before it begins than after the end of the accounting period or after an audit has been initiated.
MODEL OF COOPERATION
What does the cooperation look like?
We determine the scope of work after analysing the type of transaction and the current manner of settlement.
Determining the scope
We get to know the group structure, the types of transaction and the purpose of the project. We identify the documents and data needed.
Analysis of settlements
We verify the contracts, the financial data and the manner of determining remuneration between the entities.
Conclusions and solution
We present an assessment of the current rules and indicate the changes needed. The project may end with the preparation of a policy, a benchmarking analysis, a change to the settlement model or another agreed scope of work.
Implementation and further support
We help translate the established rules into current settlements. If the terms of transactions or the group's business change, we support the client in updating the model.
WHY US
Why Russell Bedford?
Taxes analysed together with law and finance
The terms of an intra-group transaction stem from contracts and the business model, and their effects are reflected in the financial data. In complex projects, we combine the expertise of tax advisers, advocates, attorneys-at-law and statutory auditors.
Advice and defence of the solutions adopted
We support clients both in creating the settlement model and when the manner of settlement is challenged by the tax authority.
Support for capital groups
We run projects for entities operating within group structures, where the settlements of Polish companies need to be aligned with the rules applicable across the entire group.
International projects
Russell Bedford Poland is part of Russell Bedford International. In matters covering several jurisdictions, we cooperate with advisers from other countries.
TEAM
Transfer pricing team
Damian Kuszewski
Senior Tax Consultant | Trainee Advocate, Tax Department of Russell Bedford Poland
Lead consultant for transfer pricing
Damian Kuszewski is a senior tax consultant and trainee advocate in the Tax Department of Russell Bedford Poland. He combines knowledge of finance and law, supporting entrepreneurs and individual clients in tax advisory and legal structuring projects.
He specialises in the lump-sum tax on company income (Estonian CIT), personal income tax (PIT), tax reliefs, family foundations and transfer pricing. In his practice he also carries out projects concerning the transformation of taxation models and the mitigation of tax risks.
Specialisations
- Transfer pricing
- Transfer pricing documentation and declarations
- Lump-sum tax on company income (Estonian CIT)
- Personal income tax (PIT)
- Family foundations
- Legal and tax structuring
- Tax risk analysis
Bożena Pawłowska
Project Manager
Areas of specialisation
Transfer pricing · Income taxes · Tax disputes · Capital groups
An attorney-at-law specialising in tax law, in particular income taxes and transfer pricing. Associated with the Katowice office of Russell Bedford Poland since 2013.
She leads projects concerning the development and implementation of transfer pricing solutions in capital groups, the determination and verification of settlement rules, and the representation of clients in disputes with tax authorities.
Depending on the scope of the project, the transfer pricing team also cooperates with attorneys-at-law, advocates, statutory auditors and financial experts.
FAQ
Frequently asked questions about transfer pricing
Transfer pricing concerns the terms of transactions set between related entities. These terms should correspond to the arm's length principle.
RELATED SERVICES
Related services
Transfer pricing documentation
Local File, Master File, benchmarking analyses, compliance analyses and TPR information.
Audits and tax proceedings
Support during verification activities, tax audits, customs and fiscal audits and tax proceedings.
Tax planning and restructurings
Analysis of the tax consequences of changes to the structure of an enterprise and a capital group.
Tax advisory
Ongoing advisory for companies, capital groups and business owners.
View serviceCONTACT
Let's talk about transfer pricing
We can start with a single transaction or with a review of the settlement rules applied across the entire group.
Once we have familiarised ourselves with the situation, we will determine the scope of the analysis, the data needed and the manner of further action.