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Form TPR-C – how to sign and who is responsible?

The Polish Order has introduced a number of changes to the Polish tax system, also with regard to transfer pricing regulations. One of the important changes is the merger of the TPR-C (TPR-P) information and the statement on preparation of documentation and market prices into one document, which will be submitted by taxpayers as early as with regard to the year 2022.

Provisions of the CIT Act – signing of transfer pricing information

Pursuant to Article 11t(5) of the CIT Act, transfer pricing information is signed by:

  • a natural person – in the case of an affiliated entity that is a natural person,
  • a person authorised by the foreign entrepreneur to represent him in the branch – in the case of an affiliated entity being a foreign entrepreneur with a branch operating in the territory of the Republic of Poland,
  • a manager of the entity within the meaning of Art. 3 (1) pt. 6 of the Accounting Act, i.e. a member of the board of directors or other managing body, partners or general partners managing the company’s affairs, and where the entity is managed by a multi-member body – by a designated person who is a member of that body.

It should be pointed out that it is not possible for an attorney to sign this by proxy. The only exception in this respect is for proxies who are lawyers, legal advisers, tax advisers or auditors.

Changing the scope of the TPR and the liability of attorneys

As the TPR form will include a statement on the preparation of transfer pricing documentation and price marketability, the changes introduced have raised a number of doubts among taxpayers. The question has arisen as to who is liable if the transfer pricing information including the statement on price marketability is signed by a proxy who is a legal adviser, tax adviser or expert auditor.

Who should be held liable for breach of duty to file the TPR-C information? The taxpayer or the proxy signing the information?

In response to the doubts that have arisen, on 30 May 2022 the Minister of Finance issued a response to parliamentary interpellation No. 31287 on the signing of transfer pricing information (ref. DCT3.054.1.2021). According to the position of the Minister of Finance, this responsibility may also extend to the proxy allowed by the CIT Act.

In the interpretation, it was pointed out that taking into account the fact that the CIT Act does not contain detailed regulations concerning liability for the correctness of transfer pricing information data, the liability of proxies should be determined on the basis of the provisions of the Tax Code, taking into account the jurisprudence of administrative courts. Pursuant to Article 80a § 1 of the Tax Code, if separate acts do not provide otherwise, a declaration, including a declaration submitted by means of electronic communication, may also be signed by a proxy of a taxpayer, remitter or collector.

It should be borne in mind that, in accordance with Article 3(5) of the Tax Code, the concept of a declaration also includes statements, lists, reports and information which taxpayers, remitters and collectors are obliged to submit under the provisions of the tax law. Therefore, as indicated in the light of the above, attorneys-at-law, legal advisors, tax advisors or expert auditors sign the transfer pricing information, acting on the basis of an authorisation to sign the tax return (UPL-1). As the Minister of Finance points out, it is important that the authorisation to sign the return is a special type of power of attorney authorising only the signing of the return, excluding other actions on behalf of the taxpayer. According to the explanation provided, the legal and tax consequences related to transfer pricing information data are borne by related parties obliged to submit TPR information. The issues of fiscal criminal liability should be considered in the context of the general principles of liability set out in the Fiscal Penal Code – i.e. guilt and intentionality of the perpetrators’ actions.

Thus, as highlighted, the proxy may be liable for breach of the obligation to file the information, filing the information inconsistently with the local documentation or the actual state of affairs, which may involve fiscal criminal liability for a fiscal offence.

Qualified electronic signature certified by EU countries in case of TPR

In addition, in his response to the interpellation, the Minister of Finance confirmed the possibility of signing the TPR-C form using a qualified electronic signature, which is certified by an entity designated by any European Union Member State.

Any changes to the tax legislation raise a number of questions among taxpayers and may cause documentation and record-keeping difficulties. A solution allowing TPR-Cs to be signed with an electronic signature from any EU country may be considered beneficial. The issue of transferring responsibility to attorneys may require additional scrutiny of the information and documentation provided to the legal advisor, tax advisor or auditor. This is because they will be responsible for the conformity of the form with local documentation and the actual state of affairs.

The full text of the response to Interpretation No. 31287 can be found here.