The development of international capital groups with enterprises in many different countries makes the issues related to transfer pricing inextricably inherent to eliminating double taxation. This issue surfaces in situations of tax authorities in a given country challenging the transfer pricing applied in transactions between a taxpayer and affiliated entities that are tax residents in different countries. This leads to estimating the total transaction income in one of the countries, which means that the double taxation of the same income in a country, the tax authorities of which estimated the income, and in a country, that the second party of the transaction has its tax residence.
In order to avoid severe consequences, tax authorities in individual countries seek to implement the principle of taxing a given income only once, in one of the countries of the entities participating in a particular transaction. Achieving this objective requires agreeing complex procedures and standards that regulate the double taxation elimination methods, which are possible through mutual cooperation between the tax administrations of specific countries. The mutual agreement procedure (MAP) is also provided for in all double taxation agreements concluded by Poland. Such a procedure may be employed by anyone who considers that the actions of Poland or another country expose the person to double taxation of income or assets.
The services we offer include:
- analysing documents and developing a relevant strategy,
- developing an MAP application,
- representing a client in negotiations and contacts with the representatives of a competent authority (Ministry of Finance) responsible for the proceedings,
- participation in meetings with the representatives of the Ministry of Finance, if it proves necessary in an MAP procedure,
- support in drawing up required documents, analyses and explanations requested by the Ministry of Finance,
- monitoring the entire decision-receipt process, including forwarding case status to the client.
In order to eliminate double taxation of income of affiliated entities, if the income of a domestic entity is, by the tax administration of a country different than Poland, included in the income of a foreign affiliated entity and taxed accordingly in connection with this administration determining the conditions that would be agreed by non-affiliated entities, the Minister of Finance may, at the request of the affiliated entity, adjust the income of such an entity, provided the provisions of international agreements allow such an adjustment (so-called unilateral adjustment).
The unilateral adjustment procedure is an alternative to the MAP referred to above.
A unilateral adjustment may be implemented if:
- the conditions determined by the tax administration of another country are consistent with the conditions that would be agreed by non-affiliated entities,
- a foreign affiliated entity agrees to the tax administration of such another country including the income of a domestic affiliated entity in the income of a foreign affiliated entity and their appropriate taxation.
It should be noted that unilateral adjustment should be implemented when the case has not been properly settled as part of the MAP.
The services we offer include:
- analysing documents and developing a relevant strategy,
- drawing up a unilateral adjustment application,
- representing a client in negotiations and contacts with the representatives of a competent authority (Ministry of Finance) responsible for the proceedings,
- participation in meetings with the representatives of the Ministry of Finance, if it proves necessary in an MAP procedure,
- support in drawing up required documents, analyses and explanations requested by the Ministry of Finance,
- monitoring the entire decision-receipt process, including forwarding case status to the client.
