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What is a ‘safe’ interest rate on loans between related entities?


The amendments to transfer pricing regulations, in force since 1 January 2019, include the introduction to the Polish fiscal system simplified settlement rules (the so-called safe harbour), which will be applicable inter alia to simple form of debt financing between related entities, i.e. loans, credit and bonds.

The solution means that where a taxpayer has met a number of conditions set out in the statute (Art. 11g CIT Act and Art. 23s PIT Act), tax authorities will not question the level of interest adopted. Moreover, the taxpayer will be released from the obligation to compare a comparative analysis or description of compliance for such transactions.

One condition for being eligible for the safe harbour mechanism is where the interest rate on a loan is set based on the kind of base interest rate and margin as set out in an announcement by the Minister of Finance as at the date the agreement in question. Such announcements will be issued at least once a year – depending on the changes in the economic conditions.

Under the MF announcement of 31 December 2018, since 1 January 2019 the kinds of base interest rates with respect to the transactions in question are as follows:

  • in PLN - WIBOR 3M;
  • in USD - LIBOR USD 3M;
  • in EUR - EURIBOR 3M;
  • in CHF - LIBOR CHF 3M;
  • in GBP - LIBOR GBP 3M.

The margin amounts to 2 percentage points. Should the base interest rate, as set out in the announcement, be negative, the margin will be the sum total of the absolute value of the base interest rate plus 2 percentage points.


Let us assume that Company X has granted a loan to its related entity, Company Y, in EUR. The EURIBOR 3M at the time of contract was -0.5%. It the taxpayer wishes to apply the new mechanism, the maximum interest on the loan will be 2.5%.

Please note that the kind of base interest rate and the level of margin are only applicable to the controlled transactions which, at the taxpayer’s option, are subject to the safe harbour simplified regime. They cannot provide a reference for a taxpayer or a tax authority in determining market interest rates for transactions that do not meet the conditions specified in the regulations.

Where a taxpayer does not apply the new entitlement (whether on account of failure to meet the statutory conditions or at his option), the general rules for verification of the market-level interest will apply.


Anna Skórska, Tax Consultant, ATA Tax Sp. z o.o.

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