TP – tax havens

The Polish Deal also introduces a new obligation to authenticate contractual counterparties. From 2022, taxpayers will need to check whether their counterparties make settlements with entities from so-called tax havens, and who is their so-called beneficial owner.

Tax Haven Due Diligence

  • As of 2022, taxpayers will, for the first time, be required to exercise due diligence in authenticating their contractual counterparties in respect of transactions conducted in 2021. They will be required to determine:
  • whether these contractors have made any settlements with entities from tax havens;
  • who appears in the transaction chain as their beneficial owner.
  • This obligation will apply to all CIT and PIT taxpayers whose total transaction values exceed the threshold of PLN 500,000 per year.
  • The verification obligation applies to both related and unrelated counterparties, domestic and foreign.
  • A statutory presumption is created, according to which the beneficial owner is assumed to be an entity from a tax haven if the contractor has made any settlements in a tax haven.
  • Unless this statutory presumption is rebutted, there will be a duty to prepare local transfer pricing documentation.
  • The contracting companies’ management boards will be obliged to sign and submit to the tax authorities a special declaration on preparing complete transfer pricing documentation (which previously applied only to significant intra-group transactions). Failure to do so can result in a penalty fine being imposed, up to a maximum of approx. PLN 25 million.
  • Companies will be required to report such transactions to the Head of the National Tax Administration using the TPR-C form, which is used to select taxpayers for a tax inspection.
  • The tax authorities may impose a fine of 10-30% of additional tax liability in the event of a negative finding during a tax inspection.