APA-C as a report on the implementation of the APA agreement

An APA (advance pricing arrangement) is an agreement on the transfer price applied in transactions between related parties, concluded between a taxpayer and the Head of the National Revenue Administration. The APA takes the form of an administrative decision and constitutes a confirmation by the tax authority of the arm’s length principle of settlements between the taxpayer and related parties within the transaction covered by the agreement.

Due to the growing scale of APA agreements, as reflected in the record number of decisions issued by KAS during 2023 (as we recently detailed in our blog – https://www.mddp.pl/najnowsze-dane-statystyczne-dotyczace-procedury-apa/), more and more taxpayers are taking advantage of the benefits associated with obtaining an agreement. These include exemption from the obligation to prepare local transfer pricing documentation (to the extent of transactions covered by the APA). The main incentive for entering into APAs was the exemption of taxpayers in the scope of transactions covered by the agreement from Article 15e of the CIT Law, which related to the limit on the inclusion of the costs of services, fees and charges to related parties in the taxpayer’s. However, it should be recalled that Article 15e was only in effect for 2018-2021 and has been repealed.

ne of the taxpayer’s obligations after entering into an agreement is to submit a report to KAS on the implementation of the APA for each subsequent year of its duration. The report is submitted in the form of an electronic form APA-C (or APA-P in the case of individuals) through the e-Declarations system gateway on the Ministry of Finance’s website.

With regard to reports for the years completed and covered by the agreement, the taxpayer has three months from the date of receipt of the decision to file the reports. In contrast, the deadline for filing the annual APA-C report is the deadline for filing the annual tax declaration. This means that the deadline for filing the APA-C for 2023 is April 2, 2024.

The variety of the APA-C forms

An interesting fact about the APA-C form is that for each taxpayer the scope of information required can be quite different. In addition to the standard information on the identification of the taxpayer and its counterparties in the transaction covered by the agreement, the value of the transactions identified for the period covered by the report, and the method of verification of the transfer price, the form contains Section F covering so-called individual information. These are tailored to the nature of the transaction and often relate to key parameters/conditions of the transaction subject to the agreement between the taxpayer and KAS. 

The scope of the required individual information, determined by KAS separately for each agreement, is indicated in detail in the content of the APA decision provided to the taxpayer. It happens that preparing comprehensive answers to KAS questions can be time-consuming and cause problems for the taxpayer, so it is advisable to proceed with the completion of the APA-C report well in advance.

It’s worth remembering that the APA-C form is intended to confirm that the taxpayer complies with the terms of the agreement concluded with KAS. Failure to confirm compliance with the terms may even result in the revocation of the issued decision, which is why it is so important not only to submit the report on time, but also to fill in the form correctly. 

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If you need any support in the APA procedure or in fulfilling your obligations under the agreement you just signed, contact us today!