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Master File not for selected business division but for all group entities


Taxpayers have less and less time for preparing tax documentation for 2017 which, in accordance with Polish regulations, in the case of taxpayers whose revenues or costs within the meaning of the Accounting Act exceeded in 2016 the equivalent of EUR 20 million should include also information about the group of related parties (the so called group documentation – Master File).

The Polish legislator, when implementing the arrangements under BEPS 13 to Polish legal regime, set the above threshold for group documentation at a very low level – for example in Germany the obligation to prepare Master File covers entities whose revenues in the preceding year exceeded EUR 100 million, while in Austria the revenues must be in excess of EUR 50 million (over two preceding financial years). So it may turn out that a Polish subsidiary will prepare Master File, while its much larger parent established in another country will not. What is important, the preparation of Master File may be especially burdensome for member entities of groups operating in different, often very far-flung business areas, in the structure of which many divisions independent of each other may be distinguished. And the reasons is that it is not possible to prepare documentation the scope of which covers only the operations of a selected division, which has been communicated recently by way of an individual binding ruling issued to a certain taxpayer (binding ruling of 4 December 2017, ref. no.  0111-KDIB1-3.4010.284.2017.1.IZ).

The taxpayer applied to Director of the National Fiscal information with an enquiry whether in the presented factual background he may prepare information about the group of related entities containing only information about the organisational unit of which he is a member or only about the entities functioning within the division under which the company is included.

It is not difficult to understand the taxpayer – the scope of information that should be included in the group documentation is very broad, which in the case of a need to describe all group member entities, also those not related to the taxpayer in business terms, may turn out to be very difficult. In the table below we want to remind data required by statutory regulations (the scope of which was clarified in detail in implementing regulations), together with corresponding OECD recommendations under BESP 13.


  CIT / PIT Act OECD – based on BEPS Action 13: 2015 Final Report (Annex 1 to Chapter V)
1)        the identification of a related entity which has prepared information about the group of related entities, stating also the date on which the entity files its annual tax return  
2)        organisational structure of the group of related entities legal and ownership organisational structure of the group (as an organisational chart)
3)        a description of principles for determination of transaction prices (transaction pricing policy) applied by the group of related entities general description of business carried on by the group of related entities
4)        a description of the objects and scope of business carried on by the group of related entities
5)        a description of significant intangibles held, created, developed and used in the course of business by the group of related entities intangibles, including among others:
 - a description of the group’s overall strategy for the development, ownership and exploitation of intangibles
- a list of important intangibles
- a list of agreements concluded between group members and relating to intangibles
- a general description of the group’s policies related to intangibles and R&D
- a description of transfers of intangibles within the group in the tax year
6)        a description of financial situation of the group member entities together with consolidated financial statements of the related entities making the group, intercompany financial activities in the group  of related entities, including among others:
- a description of how the group is financed (also from external sources)
- the identification of members of the group that provide a central financing function
- a description of the general transfer pricing policies relating to financing arrangements between group entities
7)        a description of arrangements on income tax made with tax authorities of countries other than the Republic of Poland, including unilateral advance pricing agreements (APAs).
financial and tax positions of the group, including among others:
- the group’s consolidated financial statements
- a list and description of concluded APAs



The tax authority did not agree with the presented argumentation. Although, as noted by the taxpayer:

  • divisions within the group operate independently of each other,
  • divisions operate within their business areas under separate brands,
  • the group does not have common – for all divisions – principles for determining transactional conditions inside the group, the conditions (terms) of intra-divisional transactions are agreed independently of the conditions (terms) agreed in other divisions,
  • members of the divisions, apart from transactions with the holding company, do not effect any  “inter-divisional” transactions with other related entities,

since the group is comprised of all companies in which the taxpayer’s shareholders have direct or indirect participation, the applicant is obligated to include information about the entire group (and not only about a selected division) in the Master File documentation. Lack of any functional ties, connected with the pursuit of any common business task or objective, to what inter alia the taxpayer made reference, is of no significance in this case. Consequently, even if the taxpayer operates e.g. within the division specialising in the production of dairy products, it may turn out that he will have to present also information about e.g. the production of cleaning agents, because such operations are also included within the scope of business of the group of related entities of which the taxpayer is a member.

Having regard to the above binding ruling as well as the applicable regulations, Polish taxpayers should not only become familiar in advance with the  scope of required information which should be included in the group documentation prepared in accordance with Polish regulations, but also gather successively the necessary data and documents – especially if the parent in the group prepares Master File based on regulations which are less rigorous than Polish regulations or, what is even worse, because of a low threshold of revenues/costs set in domestic regulations, the Polish entity is the only group member required to prepare the group documentation.


Barbara Otrzonsek, Tax Consultant, ATA Tax Sp. z o.o.