As a reminder, the announcement of the Minister of Finance dated 20.12.2024 on the publication of the type of base interest rate and margin for the purposes of transfer pricing for personal income tax and corporate income tax came into force on 01.01.2025. However it should be borne in mind that the publication of the synthetic rates of LIBOR GBP 3M and LIBOR USD 3M ended at the end of March 2024 and September 2024, respectively. In connection with the above, the announcement abandoned the use of the rates of LIBOR USD 3M and LIBOR GBP 3M, and for all loans (credits and bond issues) in US dollars or British pounds covered by the safe harbour regulation, the base interest rates based on the reference rates, respectively: SOFR and SONIA, apply.
Link to the announcement: https://www.podatki.gov.pl/media/10489/obwieszczenie-safe-harbour-2025.pdf
The announcement publishes the type of base interest rate and the amount of the margin needed to determine the interest rate on a loan, credit or bond issue transaction between related entities, entitling (as one of the conditions) to benefit from the safe harbour simplification for transfer pricing purposes.
We would like to remind you that in accordance with the Article 11g sec. 1 of the Corporate Income Tax Act of 15.02.1992 (hereinafter: ,,CIT Act”):
In the case of a controlled transaction relating to a loan, a tax authority shall not determine the taxable person’s income (loss) within the scope of the interest rate of that loan if all of the following conditions are met:
1) the annual interest rate on the loan as at the date of conclusion of the agreement is set based on the type of base interest rate and the margin specified in the announcement of the minister responsible for public finance valid as at the date of conclusion of that agreement;
2) no fees, other than interest, related to the granting or servicing of the loan are to be paid, including commissions or bonuses;
3) the loan was granted for a period not longer than 5 years;
4) during the tax year, the total level of liabilities or receivables of the affiliated entity arising from the principal amount of loans with affiliated entities, calculated separately for granted and taken loans, does not exceed PLN 20,000,000 or the equivalent of this amount;
5) the lender is not an entity having the place of residence, the registered office or the management in a territory or in a state applying harmful tax competition.
That is, one of the conditions for the application of the safe harbour referred to in the aforementioned provision is that the annual interest rate on the loan as at the date of conclusion of the agreement is to be determined on the basis of the type of base interest rate and the margin, as specified in the announcement of the minister responsible for public finance valid as at the date of conclusion of that agreement. Importantly, the Article 11g sec. 1 item 1 of the CIT Act clearly and directly states that the interest rate is determined as at the date of conclusion of the agreement and should be defined on the basis of the type of base interest rate and the margin, specified in the announcement of the minister responsible for public finance, valid as at the date of conclusion of this agreement. Thus, for the purpose of applying the safe harbour mechanism, the annual interest rate on the loan is determined on the date of conclusion of the loan agreement.
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