The growing number of advance pricing agreement applications in Poland shows that taxpayers are increasingly using APA as a tool to manage transfer pricing risk. It is important, however, to remember that filing an application does not itself provide APA protection.
Protection results from the issued agreement
The legal basis for APA in Poland is the Act of 16 October 2019 on the resolution of double taxation disputes and the conclusion of advance pricing agreements. The competent authority is the Head of the National Revenue Administration.
An APA involves the tax authority accepting a specific transfer pricing verification method for the transaction covered by the agreement. The protection is linked to the issuance of the agreement, not merely to the filing of the application.
The agreement may also result in an exemption from the obligation to prepare local transfer pricing documentation for transactions covered by the APA for the relevant period.
An APA may also cover a period before the decision is issued
An important point is that APA protection does not necessarily apply only to periods following the issuance of the agreement.
In certain cases, an APA may cover the period from the beginning of the tax year in which the application was filed. This means that the effects of the agreement may also extend to a period preceding the date on which the decision is issued.
This does not change the basic principle that until the agreement is issued, the taxpayer does not yet have certainty as to the final scope of the protection granted.
APA should be treated as a strategic tool
From the perspective of tax directors and transfer pricing teams, APA should primarily be viewed as a strategic tool for planning and securing future transfer pricing settlements, rather than as a response to an immediate risk.
The procedure requires advance preparation of the underlying rationale, financial data, the settlement model and assumptions concerning the selected transfer pricing method.
For this reason, the decision to apply for an APA should be made well in advance and as part of the group’s broader transfer pricing strategy.
Interest in APA in Poland continues to grow
Data published by the Ministry of Finance shows a clear increase in the popularity of the procedure. Between 2006 and 2017, a total of 90 applications were filed, while approximately 700 applications were submitted in the period 2018–2023.
In 2023 alone, 108 decisions were issued, while 254 proceedings remained pending at the end of the year.
These figures show that APA is no longer an exceptional instrument and is increasingly becoming part of transfer pricing risk management.
The key conclusion is straightforward: filing an APA application does not itself provide protection. Protection results from the issued agreement, although the APA may also cover the period from the beginning of the tax year in which the application was filed.
Please contact us if your organisation is considering an APA and requires support in assessing whether the procedure is appropriate.
We support businesses in assessing whether an advance pricing agreement is appropriate, preparing the application and analysing the underlying settlement model and transfer pricing method. We also help identify transactions that may particularly benefit from APA protection.
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