Poland issues Tax clarifications on transfer pricing – No. 6: Cost Plus Method

Category: Other Documents, Transfer Pricing Library, Transfer Pricing News | Tag: ,
« | »

September 29, 2023 the Polish Ministry of Finance has published tax explanations regarding transfer pricing No. 6 regarding the cost-plus method.

The purpose of the explanations is to present practical aspects related to the use of the cost plus method. The explanations take into account the recommendations of the Transfer Pricing Forum of September 28, 2021 regarding the description of the cost plus method and comments submitted as part of the tax consultations.

The cost-plus method is described in OECD and UN documents:

  • Chapter II, Part II, Section D, paragraphs 2.45-2.61 of the OECD Guidelines;
  • Chapter 4.4 of the UN Handbook

See the previous Polish clarifications on transfer pricing:

 
Click here for unofficial English translation






Related Guidelines

  1. TPG2022 Chapter II paragraph 2.52Another important aspect of comparability is accounting consistency. Where the accounting practices differ in the controlled transaction and the uncontrolled transaction, appropriate adjustments should be made to the data used to ensure that the same type of costs are used in each case...
  2. TPG2022 Chapter II paragraph 2.48For example, assume that Company A manufactures and sells toasters to a distributor that is an associated enterprise, that Company B manufactures and sells irons to a distributor that is an independent enterprise, and that the profit margins on the manufacture of basic...
  3. TPG2022 Chapter II paragraph 2.47Following the principles in Chapter I, an uncontrolled transaction is comparable to a controlled transaction (i.e. it is a comparable uncontrolled transaction) for purposes of the cost plus method if one of two conditions is met: a) none of the differences (if any)...
  4. TPG2022 Chapter II paragraph 2.46The cost plus mark-up of the supplier in the controlled transaction should ideally be established by reference to the cost plus mark-up that the same supplier earns in comparable uncontrolled transactions (“internal comparableâ€). In addition, the cost plus mark-up that would have been...
  5. TPG2022 Chapter II paragraph 2.45The cost plus method begins with the costs incurred by the supplier of property (or services) in a controlled transaction for property transferred or services provided to an associated purchaser. An appropriate cost plus mark-up is then added to this cost, to make...
  6. TPG2022 Chapter II paragraph 2.13This part provides a detailed description of traditional transaction methods that are used to apply the arm’s length principle. These methods are the comparable uncontrolled price method or CUP method, the resale price method, and the cost plus method....


Related Case Law

  1. US vs Perkin-Elmer Corp. & Subs., September 1993, United States Tax Court, Case No. T.C. Memo. 1993-414During the years in issue, 1975 through 1981, the worldwide operations of Perkin-Elmer (P-E) and its subsidiaries were organized into five operating groups, each of which was responsible for the research, manufacturing, sales, and servicing of its products. The five product areas were...