Since 2019, Polish tax regulations proposed by the Ministry of Finance impose responsibility for non-arm’s length conditions of intragroup transactions directly on members of management boards. By the end of the 9^th month after the fiscal year-end, each member of a management board is obliged to submit a statement and confirm that all material transactions concluded with related parties by the Polish entity are in line with the arm’s length principle. Failure to submit the statement or negligent misrepresentation (e.g., where the statement is proved to be untrue) may trigger imposing personal penalties of a maximum value of 5 million € on each member of the board. The irrevocable obligation to file the statements causes many practical hurdles, which will be discussed in this article.

Polish entities operating within multinational groups also struggle with a significant increase of the effective tax rate caused by limitation of deductibility of costs of intercompany services and royalties. Since 2018, costs for such services or license fees paid to related parties and exceeding approx 700,000 € plus 5 % of EBITDA annually may not be deducted for CIT purposes, unless they are covered ...