Poland: Grant of free-of-charge guarantee treated as “transaction” for transfer pricing purposes (court decision)
Concept of transaction must be defined broadly and cannot be equated solely with sales contracts within the meaning of the civil law
Treated as “transaction” for transfer pricing purposes
The Supreme Administrative Court (Naczelnego Sądu Administracyjnego) in a February 2022 decision determined that because the term “transaction” is not defined in Article 9a of the corporate income tax law (or for that matter, in any other tax or civil law provision), it must be considered that the term does not have a legal definition.
Consequently, relying both on a linguistic interpretation (referring to the dictionary definition) and jurisprudence in this regard, the court concluded that the concept of transaction must be defined broadly and cannot be equated solely with sales contracts within the meaning of the civil law. Accordingly, the court found that the notion of transaction may apply to a legal act consisting of the grant of a free-of-charge loan guarantee.
The case identifying information is: II FSK 1475/19 (3 February 2022)
Read a February 2022 report prepared by the KPMG member firm in Poland
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.