Transfer Pricing Adjustments after 2025 – new challenges in CIT, VAT and KSeF

Many taxpayers within international groups receive so-called transfer pricing adjustments after the end of the tax year but before filing their CIT returns. This typically occurs when initial assumptions regarding profitability, costs, or revenues differ from actual results, for example, due to changes in exchange rates, raw material prices, or market conditions. The purpose of such adjustments is to align the taxpayer’s profitability with market levels.

However, in order to correctly recognise such an adjustment in tax returns, specific conditions arising from CIT regulations must be met, and its potential impact on VAT and compliance with the already applicable KSeF requirements must be analysed.

Conditions for recognising transfer pricing adjustments for CIT purposes

In practice, receiving a transfer pricing adjustment from a related party does not automatically determine whether it can be recognised for tax purposes. Pursuant to Article 11e of the CIT Act, such an adjustment may be taken into account when determining the taxpayer’s revenues or tax-deductible costs only if specific statutory conditions are met.

Condition 1 – Arm’s length nature of terms agreed ex ante

The first and key condition is that, during the tax year, the terms of the controlled transaction must have been set at arm’s length:

“in controlled transactions carried out by the taxpayer during the tax year, terms were agreed which would have been agreed by unrelated parties” (Article 11e(1) of the CIT Act)

This means that a transfer pricing adjustment cannot be used to correct transaction terms that were not compliant with the arm’s length principle from the outset. The taxpayer should be able to demonstrate that the arm’s length nature of the transaction was ensured at the planning stage (ex ante), in particular through:

• selecting an appropriate transfer pricing method,
• preparing a benchmarking (comparability) analysis or a compliance analysis,
• implementing a transfer pricing policy,
• properly defining settlement and adjustment mechanisms in agreements between related parties.

Condition 2 – Change in material circumstances or ex post data

The second condition is the occurrence of circumstances justifying an adjustment after the end of the year:

“there has been a change in material circumstances affecting the conditions established during the tax year, or the costs actually incurred or revenues actually received forming the basis for the transfer pricing calculation are known, and ensuring their compliance with the conditions that would have been agreed by unrelated entities requires an adjustment to the transfer prices” (Article 11e(2) of the CIT Act)

According to the explanations provided by the Ministry of Finance, such circumstances may include, among others:

• significant fluctuations in the prices of raw materials or supplies,
• changes in exchange rates or interest rates,
• differences between projected and actual costs, identified only after the end of the year.

It should be emphasised that a transfer pricing adjustment cannot be based on budgeting errors or inaccurate financial forecasts. Such cases may be challenged by the tax authorities.

Condition 3 – Statement or accounting evidence from a related party

In the case of adjustments reducing the tax base (downward adjustments), the legislator has introduced an additional formal requirement:

“at the time the adjustment is made, the taxpayer holds a statement from the related party or accounting evidence confirming that the related party has made a transfer pricing adjustment in the same amount as the taxpayer” (Article 11e(3) of the CIT Act)”

The purpose of this provision is to prevent situations in which an adjustment is recognised on only one side of the transaction, thereby leading to tax asymmetry.

Condition 4 – Legal basis for the exchange of tax information

The final condition, applicable only to downward adjustments, is the existence of an appropriate legal basis for the exchange of tax information:

“there is a legal basis for the exchange of tax information with the country in which the associated entity has its place of residence, registered office or place of management” (Article 11e(4) of the CIT Act)

In practice, this means that there must be, for example, a double taxation agreement or another agreement enabling the exchange of tax information in force between Poland and the counterparty’s country of residence.

In summary, every transfer pricing adjustment should be analysed in detail before being included in the CIT return, and the relevant documentation prepared in advance, preferably during the tax year.

Transfer pricing adjustments and VAT – the CJEU’s new approach

For many years, the prevailing view in case law and tax practice was that transfer pricing adjustments are neutral from a value added tax (VAT) perspective. It was argued that, since their purpose is to align overall profitability with market levels—rather than to correct the price of a specific transaction—they do not trigger an obligation to issue a VAT invoice or adjust output tax. This position was confirmed, among others, by Polish tax authorities and earlier judgments of the Court of Justice of the European Union.

However, the judgment of the Court of Justice of the European Union of 4 September 2025 in Arcomet (C-726/23) may significantly alter existing practice and signal a shift in the VAT treatment of transfer pricing adjustments.

In the Arcomet case, which concerned settlements between a Romanian subsidiary and its Belgian parent company, the Court examined a profitability adjustment implemented through corrective invoices. Where the subsidiary’s profit exceeded the target level, an invoice was issued increasing the parent company’s remuneration—and vice versa.

The Court questioned the VAT neutrality of such adjustments, noting that the transfer pricing mechanism was used not to adjust a previously agreed price, but effectively to determine it ex post, once the actual level of profitability was known.

In the Court’s view, the adjustment did not merely relate to overall profitability but, in substance, determined the remuneration for a specific management service. Since the value of that service was calculated based on the actual margin—even if the amount was variable or not guaranteed—the Court concluded that the service was effectively priced ex post. As a result, the invoice documenting the adjustment should not be treated as a mere profitability adjustment but rather as the original invoice for a VATable supply of services.

In light of the above, it should be emphasised that not all transfer pricing adjustments are VAT-neutral—particularly where they relate to specific supplies (services or goods), rather than to the overall level of profitability.

The timing of the price determination is therefore crucial. If remuneration is established only ex post, based on actual financial results, such an adjustment may be treated as a transaction subject to VAT.

KSeF and full transparency of transfer pricing adjustments

The National e-Invoice System (KSeF), the mandatory implementation of which is scheduled for:

• 1 February 2026 – for taxpayers whose sales value exceeded the PLN 200 million threshold in 2025 (so-called ‘large taxpayers’),
• 1 April 2026 – for all other taxpayers,

has far-reaching implications not only for invoicing, but also for the documentation and reporting of transfer pricing adjustments.

The implementation of the National e-Invoice System (KSeF) means for corporate groups not only the need to adapt ERP systems and internal processes, but also a completely new level of tax transparency regarding intra-group settlements – particularly in the area of transfer pricing adjustments.

Unlike paper or PDF invoices, which until now remained solely under the taxpayer’s control, e-invoices issued via KSeF are sent directly to the Ministry of Finance’s central database and are immediately accessible to the tax authorities. This means that every TP adjustment documented by an invoice will be visible to the National Revenue Administration in real time, along with all source data. This is a radical change from previous practice, where many TP adjustments were documented only by accounting notes, remaining outside the tax authorities’ day-to-day scrutiny.

From February 2026, the mandatory invoice format in KSeF will be the FA(3) logical structure, which, in the case of corrective invoices, requires, amongst other things:

• the precise details of each original invoice to which the correction relates (KSeF number, issue date, source number),
• specifying the period to which the correction relates,
• a precise description of the reason for the correction (e.g. “profitability correction in accordance with TP policy”).

For groups processing a large number of transactions, this means the need to implement automatic mechanisms for identifying and assigning corrections to original e-invoices ( ), otherwise it will be technically impossible to issue an invoice in the KSeF system in compliance with the requirements.

KSeF provides tax authorities with real-time access to e-invoice data, which enables:

• immediate reconciliation of TP adjustments with VAT and CIT returns,
• the identification of transaction descriptions that deviate from standards,
• verification of data consistency between e-invoices, JPK and TP documentation.

As a result, taxpayers must expect a higher risk of audit and the expectation of full consistency between all tax and accounting documents. In this context, the Court also emphasised that the tax authority may require a taxpayer claiming a VAT deduction to produce documents other than an invoice in order to demonstrate the genuine nature of the services listed on that invoice and their use for the purposes of the purchaser’s taxable transactions. It thus reiterated that the burden of proof may lie with the taxpayer to demonstrate that the supplier (including a related party) actually performed the services for which the purchaser was charged.

In the age of digital data analysis, even the choice of words in an invoice can determine how it is interpreted by the tax authorities, which necessitates greater precision and linguistic consistency.

Consequently, the implementation of KSeF will require capital groups to exercise significantly greater discipline in the area of transfer pricing. Businesses will not only have to update their TP policies, but also clearly distinguish between adjustments subject to VAT and those that are tax-neutral, and document this appropriately.

In view of the forthcoming changes in CIT, VAT and KSeF, we assist businesses in ensuring that transfer pricing adjustments are settled in a secure, compliant and comprehensive manner. Our approach combines in-depth legal and tax analysis with practical organisational and technological readiness for the new requirements.

We offer comprehensive support in the following areas, among others:

CIT – compliance with Article 11e of the CIT Act

·       We assess whether a transfer pricing adjustment meets all formal and substantive tax requirements.

·       We verify arm’s length conditions ex ante, changes in circumstances, the availability of accounting evidence, and tax information exchange requirements.

·       We develop or update:

o   transfer pricing policies,

o   benchmarking (comparability) and compliance analyses,

o   documentation supporting the validity of adjustments.

VAT – impact of transfer pricing adjustments on VAT settlements

·       We analyse whether a given transfer pricing adjustment is VAT-neutral or may trigger a tax liability.

·       We advise when to issue a VAT invoice and when an accounting note is sufficient.

·       We review existing documentation and, where necessary, recommend how to supplement it to properly reflect the nature of the transactions.

·       We prepare defence strategies and arguments for potential disputes with tax authorities, including in light of the Arcomet case (C-726/23).

KSeF – implementation and compliance with FA(3)

• We support businesses in adapting to new e-invoicing requirements and increased transparency of settlements.
• We advise on the correct reporting of transfer pricing adjustments in KSeF.
• We design processes linking adjustments to original invoices.
• We develop standards for describing TP adjustments within the FA(3) structure, ensuring consistency with transfer pricing documentation and JPK files.

Representation before tax authorities

• We represent clients before tax authorities.
• We handle proceedings related to individual tax rulings, tax audits, and APA and MAP procedures.
• We conduct comprehensive TP, VAT, and KSeF compliance reviews, along with practical recommendations for remedial and risk-mitigation actions.
   

Contact us – will support your company in preparing for the evolving tax landscape.