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In accordance with the provisions of the Act, the costs borne for years 2019 and 2018 may be accounted as tax deductible by the taxpayers who submitted the APA applications by the end of 2019 and will receive a positive decision.

Piotr Wiewiórka, Partner
The Polish Senate adopted the Act on double taxation dispute resolution and concluding advance pricing agreements. The Act updates the regulations on concluding advance pricing agreements („APA”) and regulates a new procedure for avoiding double taxation.

Advance pricing agreements („APA”) are an effective tool of mitigating the risk of tax authorities questioning the correctness of the transfer pricing method in related-party transactions.

Mutual agreement procedure (“MAP”) enables the taxpayer to eliminate the risk of double taxation based on the double taxation treaties concluded by Poland.

Accounting the costs of selected intra-group services and intra-group license payments as tax deductible

The new Act solves the so far problematic issue of accounting the costs of selected intra-group services and intra-group license payments as tax deductible costs.

In accordance with the provisions of the Act, the costs borne for years 2019 and 2018 may be accounted as tax deductible by the taxpayers who submitted the APA applications by the end of 2019 and will receive a positive decision.

APA – changes

The adopted Act clarifies the current procedure of issuing an APA decision.

The Act provides also the new possibilities to apply for an APA:

  • by the foreign investor that is planning to start its operations in Poland;
  • for the transactions subject to the tax control, tax proceedings or administrative proceedings conducted for a period earlier than the last two fiscal years preceding the year of submitting the APA application.

The Act introduces also changes to the rules regarding ensuring compliance with the issued APA decision. According to the new regulations, possible audits will be carried out by the authorities as  verifying activities.

New MAP procedure

As regards double taxation, the Act introduces a new MAP procedure, which is the result of implementing the Council Directive (EU) 2017/1852 on the tax dispute resolution mechanisms in the European Union.

This procedure is intended to protect a taxpayer operating in two or more membership countries from the potential effects of double taxation.

The Act introduces rules based on which the mutual agreement procedure will be initiated and considered, and based on which the execution of those procedures will take place.