On 23 December 2022, the Polish Ministry of Finance published a notice in the official gazette, establishing base interest rates and margin rates for the purposes of transfer pricing for individual and corporate income taxes.
The notice specifies the type of base interest rate and the amount of margin required to determine the interest rate on a loan, credit or bond concluded between related parties, entitling to use the safe harbor simplification for transfer pricing purposes. This type of regulation has been in force in the Polish tax system since January 1, 2019.
For loans (loans and bond issues) granted in US dollars or pounds sterling before January 1, 2022, the base interest rate based on the LIBOR USD 3M and LIBOR GBP 3M indices, which were withdrawn from the financial market, was approved for the purpose of orderly repayment (Annexes ) to these agreements. For transactions in US dollars or British pounds that fall under the Safe Harbor Regulation, the base interest rates, which are only based on the new reference indices, will ultimately apply.
The allowable margins from January 1, 2023, are (i) a maximum of 2.9 percentage points for the borrower; and (ii) at least 2.4 percentage points for the lender.
The notice became effective on January 1, 2023.
