New transfer pricing regulations for intangible services

End of discretion in marketing spending

New regulations directly hit companies that treat PR budgets as a way to transfer profit to parent companies. From June 2024, every invoice for consulting, advertising, or market research services must have a hard economic justification. Tax offices in Krakow and Katowice have begun using algorithms that catch non-market margins in capital groups. If your company pays a related agency PLN 45,000 per month, you must prove that an external entity would not take PLN 20,000 for it. Numbers don't lie – the lack of a reliable price comparison (benchmarking) is the shortest way to a tax audit today.

In the third quarter of 2024 alone, the tax collector questioned marketing costs in 87 medium-sized enterprises in southern Poland. The average value of excluded costs was PLN 312,000 per entity. The problem is that companies often do not have proof of the so-called economic benefit. The official asks: 'What specifically did the company gain thanks to this PLN 100k PR strategy?'. If the answer is only a general PowerPoint presentation, the office will consider it a fictitious cost. Hard tax data requires linking the expenditure with a real increase in revenue or operational time savings.

Our experience from 482 projects completed since 2017 shows that the weakest link is the description of the service subject. Entries such as 'image support' or 'strategic consultations' are an alarm signal for auditors. Since September 2024, precise recording of specialists' working hours on the supplier side is required. If the invoice is for a lump sum and the Local File documentation lacks a comparative analysis to market rates from the Quick Analytics database or similar systems, tax risk increases by 74%. Marketing is mathematics and must be treated as such in tax books.

Marketing is mathematics. You cannot pay for a vision without calculating the market margin.

Financial penalties and sanctions in 2025

From January 2025, sanctions for errors in transfer pricing documentation will be even more severe. Currently, the maximum penalty for the lack of a Local File or providing false data in the TPR-C form is nearly PLN 200,000. However, this is only the tip of the iceberg. The biggest pain for a company's budget is the additional tax liability resulting from the estimation of income. If the office decides that the price of the PR service was overstated by 20%, it will calculate tax on this difference and criminal interest, which in 2024 is at a record high level. We recover our clients' capital precisely by early detection of such irregularities in their internal contracts.

At Orzeł Consulting Group, we checked 42 audits conducted in Małopolska companies in the last six months. In 12 cases, penalties imposed on board members under the Penal Fiscal Code resulted from signing a statement about market prices that was not supported by actual analyses. This is no longer just an accounting problem, it is a real threat to financial directors. Personal responsibility for the reliability of transfer pricing documentation is a fact that must be faced before the end of the fiscal year. It is not worth risking company stability for a few percent of savings on the internal margin.

Comparative analysis, i.e. the so-called benchmark, must be refreshed no less than every 3 years, unless there has been a significant change in the economic environment. Inflation and changes in media rates in 2023 and 2024 have made old analyses outdated. If your documentation comes from 2021, it is practically useless during an audit. The tax collector now has data from JPK_V7 systems and knows exactly how much your competitors are paying for similar services. Any deviation of more than 15% from the market median without a solid operational justification is treated as an attempt to avoid taxation.

How to prepare for a PR service audit?

The key to peace of mind is gathering proof of service delivery. For PR services, the invoice and contract alone are not enough. Tax auditors in 2024 require insight into monthly reports, copies of publications, advertising system logins, and records from business messengers. In one of our projects for a construction company, we saved PLN 1.2 million in costs only because the client had a meticulous archive of approved graphic designs from the last 2 years. Without these 'paper' proofs, the office would have considered the services fictitious, which would have resulted in a giant CIT tax surcharge.

The second step is to verify the cost base of the related party. You must know what costs your parent company actually incurs when providing you with marketing services. Were general administrative costs included in the margin? Are graphic designers' salaries adequate for their seniority? We recover money from advertising budgets, eliminating unjustified markups that will not pass the market test. In 2024, the average markup imposed on support services within capital groups in Poland oscillates around 5-8%. Any markup above 10% must have an exceptional justification in the uniqueness of know-how, which is extremely difficult to defend before a court.

We recommend conducting an internal 'dry-run' audit before the end of December. It consists of simulating a question from the tax office about a randomly selected invoice for intangible services from March or July 2024. If gathering evidence of the performance of this specific service takes your team more than 2 working days, it means that the documentation system is down. At Orzeł Consulting Group, we help implement procedures that shorten this time to 3 hours. Remember that during a real audit, time works to your disadvantage, and chaos in documents is an invitation for the inspector to dig deeper into the company's finances.

Numbers don't lie. If you can't prove service performance in 3 hours, you'll lose the audit.

Marketing is not just costs, it is assets

The correct approach to transfer pricing in marketing allows you not only to avoid penalties, but also to better manage branch profitability. When you precisely determine the market value of PR services, you gain clarity as to the efficiency of individual sales channels. Hard tax data then becomes a management tool. Since 2017, we have seen dozens of companies that completely changed their model of ordering marketing services after our tax audit, saving an average of 14% of their annual budget. This is capital that, instead of going to the tax collector in the form of penalties, goes back into the company's circulation.

It is also worth paying attention to the issue of trademarks. License fees for using the related company's logo are under special supervision since the entry into force of the Polish Deal regulations and their subsequent amendments. In 2024, you can no longer simply write off 5% of revenue as a brand fee. A valuation prepared by a certified appraiser or a detailed analysis using the comparable uncontrolled price method is required. Orzeł Consulting Group cooperates with 14 certified appraisers, which allows us to finalize such valuations within 11-18 working days, giving clients full legal security.

In summary, changes in transfer pricing from June 2024 are a signal that marketing has ceased to be a 'safe haven' for tax optimization without coverage. Every zloty spent on PR within the group must work and must be documented with mathematical precision. Our team in Krakow at 15 Floriańska Street analyzes such cases every day. If you are not sure about your Local File documentation for 2024, now is the time to act. We recover capital where others see only costs, but we always do it within the boundaries of safe tax law.