Transfer Pricing in Poland: How Digital Tax Audits Create New Risks

Data Instead of Documents: Why Tax Audits in Poland Are Becoming More Challenging for International Groups

Poland is continuing to advance the digitalization of its tax administration. With the introduction of JPK_KR_PD, the tax authorities will gain significantly broader access to structured accounting and tax data. For internationally active corporate groups, this does not necessarily create new transfer pricing compliance obligations. However, it is likely to fundamentally change how tax risks are identified and how tax audits are prepared.

For German and other international groups with manufacturing, distribution or service entities in Poland, the key question is therefore no longer what additional reporting obligations may arise. Rather, the focus is on whether information across different reporting systems is consistent and aligned.

Transfer Pricing Increasingly Under Scrutiny Through Data-Driven Analysis

Transfer pricing has long been one of the key focus areas of the Polish tax authorities. Historically, comprehensive analyses often took place only during a tax audit, when transfer pricing documentation, tax returns and accounting records were reviewed in detail.

The growing availability of structured data is changing this approach. Tax authorities can increasingly connect information from various sources through automated processes and identify potential irregularities before launching a formal audit. While transfer pricing documentation remains essential, the quality and consistency of the underlying data are becoming equally important for risk assessment.

For CFOs and tax managers, this represents a fundamental shift. It is no longer sufficient to document a transfer pricing policy. Companies must also ensure that the policy is consistently reflected in their financial and accounting data.

From Audit Triggers to Continuous Risk Monitoring

Many multinational companies still view transfer pricing primarily through the lens of a potential tax audit. However, the digitalization of tax administration is driving a transition towards continuous, data-based risk monitoring.

Tax authorities will be able to obtain a substantial portion of the required information directly from accounting and bookkeeping records. Certain data points and relationships will only become visible when combined with additional reporting sources, particularly the Polish TPR-C filing. Nevertheless, tax authorities are gaining increasing capabilities to:

• automatically analyze transaction volumes with related parties;
• assess profitability trends over several years;
• identify discrepancies between tax filings and accounting data; and
• detect unusual margins or loss-making situations within a corporate group.

As a result, the focus is shifting from traditional retrospective audits towards preventive risk management conducted by the tax authorities. Companies whose data indicate an elevated risk profile may attract attention significantly earlier than in the past.

Data Consistency Becomes a New Compliance Factor

In many corporate groups, tax-relevant information is generated across multiple systems, functions and jurisdictions. Transfer pricing documentation is often coordinated by the tax department, while accounting, controlling and financial reporting are managed elsewhere within the organization.

This is precisely where potential risks emerge. From the perspective of the tax authorities, questions such as the following are likely to become increasingly relevant:

• Do transaction values reported in TPR filings reconcile with accounting records?
• Are transfer pricing adjustments consistently reflected in documentation, tax returns and accounting data?
• Do reported margins correspond to the functions and risks performed by the Polish entity?
• Can intra-group services, royalties and other intercompany transactions be clearly substantiated and traced?

Companies capable of answering these questions before an audit begins will have a significant advantage. Transfer pricing compliance is increasingly evolving into a data-driven governance issue.

The Tax Authorities’ Own Benchmark Data Becoming the New Reality

Another particularly noteworthy development is the growing ability of tax authorities to build their own databases and benchmark sets based on large volumes of structured corporate data. In this environment, actual data reported by taxpayers may increasingly serve as the basis for risk assessments and comparative analyses.

This raises the likelihood that unusual profitability levels, royalty payments or intra-group service arrangements will be identified more quickly. Companies should therefore expect a continued increase in transparency regarding their business models and financial performance from the perspective of the tax authorities.

What Does This Mean for International Groups Operating in Poland?

For most companies, the priority is not to introduce entirely new transfer pricing processes. What matters far more is a critical review of existing processes with a focus on consistency and data quality.

Particular attention should be paid to:

• the alignment of transfer pricing documentation, tax filings and financial accounting;
• the treatment of transfer pricing adjustments;
• the traceability of intercompany transactions; and
• the availability of up-to-date transfer pricing analyses.

An integrated approach that connects tax, finance, accounting and controlling functions will become increasingly important. Transfer pricing is no longer merely a documentation exercise. It is becoming a matter of data quality and organization-wide compliance management.

Conclusion

The digitalization of tax audits in Poland marks another step towards data-driven tax enforcement. For international groups with operations in Poland, maintaining robust and consistent transfer pricing compliance is becoming increasingly important.

Going forward, the key risk factor will be less the existence of transfer pricing documentation itself and more the consistency between documented transfer pricing positions and the financial data reported to the tax authorities. Companies that proactively review their data landscape and identify potential inconsistencies at an early stage will be in a much stronger position to manage tax risks effectively.

Q&A

Does this development only affect Polish companies?

No. The JPK_KR_PD reporting requirement generally applies to Polish entities. However, the broader developments are relevant for international groups with subsidiaries or operations in Poland. The enhanced analytical capabilities of the Polish tax authorities may directly affect intercompany transactions within multinational groups.

Do multinational groups need to change their transfer pricing strategy?

Not necessarily. Many companies already have well-established transfer pricing frameworks in place. The more important question is whether these models are consistently reflected in accounting records, tax filings, TPR reporting and transfer pricing documentation.

Which areas are likely to attract the greatest attention from the tax authorities?

Particular focus is often placed on intra-group services, royalty payments, financial transactions, transfer pricing adjustments and business models characterized by persistently low margins or recurring losses. Irregularities in these areas may trigger additional scrutiny from the tax authorities.

Can formal inconsistencies become problematic even if transfer prices are arm’s length?

Yes. Even where transfer prices comply with the arm’s length principle, inconsistencies between different tax and financial reports may increase the likelihood of a tax audit or follow-up inquiries.

Why is data quality increasingly becoming a transfer pricing issue?

Because transfer pricing audits are becoming increasingly data-driven. Risk assessments are based not only on transfer pricing documentation but also on whether the underlying financial data support and substantiate the positions described in that documentation.

Will transfer pricing audit risks increase in Poland?

Not necessarily. However, the methods used to identify risks are changing. Through expanded access to structured financial and tax data, the Polish tax authorities can identify potential anomalies more quickly and more accurately. Companies with consistent processes, robust transfer pricing systems and high-quality data will be significantly better prepared for future audits.

What should CFOs and tax managers do now?

A transfer pricing compliance health check is highly recommended. Particular attention should be paid to the alignment between tax, finance and accounting functions, as well as the consistency of data across all relevant reporting streams.

New requirements create new challenges. Our Transfer Pricing team in Poland supports international corporate groups in navigating this changing environment. Working closely with specialists from tax, finance and accounting, we help organizations enhance transparency, ensure data consistency and proactively manage transfer pricing risks. Combining technical excellence, an interdisciplinary approach and extensive practical experience, we develop solutions that not only meet regulatory requirements but also work effectively in practice.