Transfer pricing audits in Poland are becoming increasingly sophisticated. The National Revenue Administration (KAS) now has specialised teams and data analytics-based tools at its disposal, resulting in a higher effectiveness of its verification activities. It is also worth noting that a presidential bill has been submitted to the Sejm (lower chamber of the Polish parliament) that envisages, among other things, an increase in penalty rates in the area of transfer pricing. Regardless of the outcome of this legislative initiative, proper management of intra-group settlements remains a priority for enterprises in 2026.
A New Quality in Audit Activities
Current transfer pricing audits are rarely random. KAS uses an extensive data environment that allows it to select entities for verification before formally initiating proceedings. IT solutions developed by the Ministry of Finance play a significant role in this process — they compile and analyse standardised data from, inter alia, TPR forms, JPK-CIT systems, CIT returns, Country-by-Country (CbC) reporting and financial statements.
An element of this strategy was the establishment in August 2025 of the Transfer Pricing Centre of Competence in Kraków. This unit focuses on data analysis with a view to verifying the correctness of tax settlements. The teams of Customs and Tax Offices (UCS) increasingly combine tax expertise with competencies in economic analysis and sector-specific knowledge. Statistics show that audits conducted by the UCS are the primary tool for verifying intra-group settlements. These proceedings can be complex and protracted, requiring adequate organisational commitment from taxpayers.
Areas of Interest for Tax Authorities
Recent practice of the tax authorities indicates that verification focuses on the following areas:
- Profitability of Limited-Risk Entities
Contract manufacturers and limited-risk distributors are subject to assessment. In line with the OECD Guidelines, such entities should demonstrate stable profitability. The generation of operating losses by these entities is a common reason for the authorities to examine the economic justification of such results.
- Intra-Group Services and the Benefit Test
Fees for management services, IT support and HR services are subject to detailed analysis. The taxpayer should be prepared to carry out a benefit test, i.e. to demonstrate the arm's length nature of the remuneration, the actual provision of the service and the existence of a measurable economic benefit for the company from acquiring the services.
- Intangible Assets (the DEMPE Concept)
With regard to royalties (trademarks, know-how, software), the authorities analyse not only the legal ownership of the asset. The DEMPE concept (Development, Enhancement, Maintenance, Protection, Exploitation) set out in the OECD Guidelines is applied. Auditors verify which entity in the group actually performs the key functions and bears the material risks related to the development, maintenance and protection of the given asset.
- Business Restructurings
The transfer of significant functions, assets or risks to other related entities (e.g. a change of business model from a full-fledged distributor to an agent) is verified in terms of a potential need to determine remuneration (the so-called exit fee) for the transfer of profit-generating potential.
- Intra-Group Financing
In the case of loans, guarantees or cash pooling structures, the arm's length nature of the interest rate and the overall economic structure of the transaction are analysed, including the borrower's creditworthiness and the business rationale of the transaction.
Penalty Risk in 2026
Currently, the provisions of the Tax Ordinance on the so-called additional tax liability apply:
- the standard penalty rate is 10% of the amount of understated income or overstated loss;
- in the absence of complete tax documentation, the rate is 20% of the amount of understated income or overstated loss;
- in specific situations (e.g. transactions with entities from so-called tax havens combined with the absence of documentation), the additional tax liability is 30% of the amount of understated income or overstated loss.
The application of these rates where irregularities are identified may constitute a significant financial burden for the enterprise.
Additionally, it is worth bearing in mind the legislative work on the presidential bill, which envisages an increase of the standard penalty rate from 10% to 20%, as well as the introduction of mandatory transfer pricing audits for the largest taxpayers (with revenues exceeding PLN 5 billion per annum). The bill has been submitted to the Sejm and will be subject to further parliamentary proceedings.
What Does This Mean for Taxpayers in Practice?
The evolution of the tax administration's approach translates into specific challenges for enterprises operating within capital groups. Taxpayers should bear in mind that audits are becoming lengthy processes. Due to the granularity of analyses, transfer pricing proceedings last on average several months, requiring the company to commit significant human and time resources. In addition, substance prevails over formalities. The authorities are not limited to verifying whether transfer pricing documentation exists. The main emphasis is placed on the substantive correctness of settlements, their business justification and the reliability of the comparability analyses applied. It should also be noted that the use of automated analytical tools by the authorities means that inconsistencies in reporting (e.g. in TPR forms or JPK-CIT) are detected at an early stage. Taxpayers are expected to verify their settlement models before executing transactions, rather than only in response to the initiation of an audit.
How Can the PwC Poland Team Help You?
Given the development of KAS's analytical tools, purely formal preparation of transfer pricing documentation is often insufficient. In response to growing regulatory requirements, our team of experts supports enterprises in the safe and systematic management of intra-group settlements. We offer comprehensive advisory services covering, among others:
- Audit and Verification of Settlement Models
We conduct reviews of existing transfer pricing policies in terms of their consistency with the actual functional profile of the company and the current OECD Guidelines.
- Preparation of Documentation and Defence Files
We prepare complete Local File and Master File documentation, benchmarking studies and dedicated argumentation packages (including detailed benefit tests and DEMPE analyses).
- Ongoing Profitability Monitoring
We support finance departments in implementing processes that enable regular verification of whether results on intra-group transactions fall within the determined arm's length ranges.
- Support During Tax Audits
We represent taxpayers during proceedings and customs and tax audits, ensuring professional communication with the administration at every stage of a potential dispute.
- Securing Settlements (APA)
We guide clients through the process of obtaining Advance Pricing Agreements (APA), which represent the most effective form of protection against the risk of transfer prices being challenged by the tax authorities.
We invite you to contact our experts to discuss the optimal approach to securing tax settlements in your organisation.
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