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Homogeneity of controlled transactions in transfer pricing


Compliance with transfer-pricing obligations is a time-consuming process. Therefore, it is advisable to plan your work in this matter as early as possible. One of the first issues that taxpayers face is the identification of homogeneous transactions.

The identification of a controlled transaction as a homogeneous transaction is an essential element in determining transfer-pricing documentation obligations. Article 11k(5) of the Corporate Income Tax Act (hereinafter: the ”CIT Act”) lists a number of criteria used to determine whether a transaction can be considered homogeneous. These are:

  • Homogeneity of the transaction in economic terms;
  • Criteria of comparability;
  • Transfer-pricing verification methods;
  • Other relevant circumstances of the controlled transaction.

The provisions of the CIT Act also indicate that the value of a homogenous controlled transaction is determined regardless of the number of accounting documents, payments made or received and related parties with which the controlled transaction is entered into. The value of the transaction must be considered separately for each homogenous controlled transaction , as well as separately for the cost and revenue side.

Identifying the homogeneity of transactions

The key element in identifying homogeneous transactions is therefore to consider them from the perspective of the characteristic features of each transaction. A company providing services of the same type to many related parties should not treat transactions with each counterparty as separate controlled transactions. Instead, it should identify the terms on which the transactions occur and, if they are comparable, recognize the provision of services to multiple related parties as one transaction. The total value of transactions with all related parties can then be considered the value of the controlled transaction.

In addition, as the documentation thresholds are set separately for the revenue and cost side, if a company provides and buys comparable services, it should not aggregate or offset the sales and purchase values in determining documentation obligations, but consider the purchase and sales categories separately.

The economic homogeneity of a transaction means that all components of a homogeneous transaction are assigned to it, even if the manner of calculating the transfer price is different for them. For example, a company providing its related parties with services of renting premises and at the same time re-invoicing the costs related to the use of utilities to the tenants should not consider these activities separately, but consider them as a homogeneous transaction, as the core of the rent and the cost re-invoicing are closely related. On the other hand, if a company receives a loan and a guarantee from its related party, it should recognise them as separate controlled transactions, because their economic substance is different in each case.

Other considerations affecting the classification of a transaction as homogeneous may be the simplifications and exemptions under the CIT Act with respect to documentation obligations. A service transaction, one part of which satisfies the so-called safe harbour conditions under Article 11f of the CIT Act, should not be deemed to be homogeneous with the part not covered by this simplification. Likewise, a transaction with multiple entities to some of which the exemption under Article 11n of the CIT Act can be applied should not be deemed to be homogeneous.

Transactions with entities from tax havens

The value of homogeneous transactions concluded with so-called tax haven entities is determined in a different way depending on whether the entity from the tax haven is related to the taxpayer. If the tax haven entity is related and the taxpayer conducts transactions with both related entities which do not have their registered office in the tax haven and with tax haven entities, the value of the homogeneous transaction constitutes the sum of the values of transactions with each of these counterparties. According to the public ruling of the Minister of Finance (no. DCT2.8203.2.2021), if the tax haven entity is unrelated to the taxpayer, the total amount of the homogeneous transaction with one counterparty in a given tax year should be analyzed. This means that in such a case, specific counterparties are to be considered, by analyzing whether the transactions with them did not exceed the documentation thresholds for so-called haven transactions, which are: PLN 2,500,000 for financial transactions and PLN 500,000 for other transactions.


Joanna Morgaś, Tax Consultant, ATA Tax Sp. z o.o.

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