The type of base interest rate and margin for 2023 announced!

A new announcement by the Minister of Finance on the type of base interest rate and margin for the purposes of transfer pricing (safe harbor for financial transactions) was published on 23 December 2022. 

The Minister of Finance has updated the eligibility conditions for using the safe harbor simplification for financial transactions.

New margin is higher compared to the previous announcement:

• for a borrower: a maximum of 9 percentage points (up from 2.8 percentage points),
• for a lender: a maximum of 4 percentage points (up from 2.0 percentage points).

Base rates for PLN (WIRON 3M rate added) and for USD (SOFR 3M Compound Rate changed to 90-day Average SOFR) were also changed.

The type of the base interest rate and the margin released in the announcement are effective starting 1 January 2023.

Loans (credits and bond issues) granted in USD or GBP before 1 January 2022 may be continued using the base interest rate based on LIBOR USD 3M and LIBOR GBP 3M withdrawn from the financial market – the aim is to secure these contracts expire (are annexed) in an orderly manner. Ultimately, transactions in USD or GBP covered by the safe harbor regulation, will be subject to base interest rates based only on the new reference ratios – SOFR and SONIA, respectively.

Link: https://monitorpolski.gov.pla/MP/2022/1260