Charge-free suretyship is not necessarily in breach of arm’s length principle – says PAC

Income represented by a suretyship received by a taxpayer free of charge is a transfer price but the taxpayer may declare compliance with the arm’s length principle, says Provincial Administrative Court (PAC) in its judgment.

Suretyships received from related parties free of charge have long been a source of concern. Taxpayers receiving them are not certain if they may file the transfer pricing representation, declaring compliance with the arm’s length principle. The Provincial Administrative Court throws some new light on this issue in its recent judgement.

For the full text of the article by tax advisor Michał Wodzicki, see Rzeczpospolita on-line, the Dobra Firma weekly or here.