New deadlines and scope for transfer pricing reporting, and CJEU VAT judgment | Tax Focus

30 May 2023 | Knowledge, News, Tax Focus, The Right Focus

The deadlines for meeting transfer pricing obligations for 2022 are approaching.

In accordance with the new regulations, related parties are required to:

  • Prepare a Local File by the end of the tenth, instead of, as previously, the ninth month after the end of the tax year
  • File transfer pricing information by the end of the eleventh, rather than as previously the ninth, month after the end of the tax year
  • Attach the Master File to the Local File by the end of the twelfth month after the end of the tax year (this deadline is unchanged from the previous legislation)

At this point, unlike in previous years, there is no information that the Ministry of Finance is working to postpone the deadlines for the fulfilment of transfer pricing obligations.

Compared to previous years, the scope of transfer pricing information to be reported for 2022 has also been expanded. The TPR form has been extended to include (without limitation):

  • An indication of the authority (head of the tax office) to which the transfer pricing information is submitted
  • A new financial indicator calculated as the share of the costs of operating activity with related parties in the entity’s operating expenses
  • Information on the value of the reportable transaction per country of incorporation or management of the counterparty
  • Information on the type of transaction reported
  • Additional information on comparability adjustments made (i.e. whether the comparability adjustment has changed the result by less than or more than 30%, or a statement that the impact of the adjustment on the result cannot be determined)
  • The obligation to submit a statement on the preparation of the Local File – as a result of this change, taxable persons will not need to submit two different documents concerning the same subject matter via different electronic channels, but instead only one integrated form

VAT – the right to deduct input tax under EU law

The Court of Justice of the European Union, in its judgment of 25 May 2023 in case C114/22, stated that a taxable person carrying out an economic transaction regarded as fictitious and invalid under the provisions of national law, may not be deprived of the right to deduct input VAT, without it being established that the criteria for classifying, under EU law, that transaction as fictitious are met or that the transaction is the result of VAT evasion.

This CJEU judgment means that Article 88(3a)(4)(c) of the VAT Act is incompatible with Directive 2006/112/EC.

It is worth remembering that in the Polish legal system, any taxable person with respect to whom a decision questioning the right to deduct input tax was issued based on Article 88(3a)(4)(c) of the VAT Act may effectively challenge such administrative decision, and even if it was confirmed to be lawful by a final court judgment.

In accordance with Article 241(2)(2) of the General Tax Code, a taxable person may file a request for the resumption of proceedings within one month from the date of publication of the operative part of the ECJ judgment in the Official Journal of the EU.

Our tax team provides comprehensive support in this respect.

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Katarzyna Pustułka

Wojciech Śliż

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