The long-anticipated simplified APA (Advance Pricing Agreement) has finally been set into legislative process and is intended to enter into force as early as 1st July 2019
- Simplified APA will allow for tax deductibility of expenses incurred on trademark licenses and know-how, as well as a certain group of services normally limited to 5% EBITDA (Art. 15e of the CIT Act)
- Obtaining a simplified APA is expected to be much faster than a standard APA (3 months compared to as many as 2 years) and cheaper (PLN 20,000 compared to as much as PLN 200,000)
- An application for a simplified APA will also require much less effort on the part of the taxpayer as the scope of the necessary documents and information will be reduced
- Obtaining a simplified APA will make it possible to avoid the obligation to prepare a local file (in Transfer Pricing) for the duration of the APA (3 years with an option for an extension)
- If the mark-up on costs of services does not exceed 5%, the taxpayer will also not be obliged to procure a benchmarking study
What is important, if the simplified APA application is submitted by the end of 2019, this will allow the taxpayer to avoid the 5% EBITDA limit also in relation to 2018. We will follow the legislative process and keep you informed of all significant changes to the simplified APA.
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