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

 

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