Can an individual fall within the scope of transfer pricing? Yes – and sooner than you think
17 August 2026
10 min read
This is the second article in our series dedicated to transactions and arrangements that are not intuitively associated with transfer pricing but which, under the current Polish regulatory framework, may nevertheless trigger important transfer pricing obligations. In this instalment, we focus on individuals and explore the key compliance requirements, common pitfalls and practical challenges that taxpayers frequently face when navigating transfer pricing rules in practice.
Although transfer pricing is most commonly associated with multinational enterprises, and complex holding structures, the practical reality is often quite different – particularly under Polish regulations.
In Poland, transfer pricing regulations may also apply to individuals, far more frequently than many taxpayers realise and often in situations that would not intuitively be perceived as controlled transactions in other jurisdictions. For this reason, it is worth understanding when an ordinary arrangement may be regarded as a controlled transaction, what factors determine such classification, and which formal obligations may consequently arise.
In this article we have analysed the key issues concerning transactions entered into by individuals with related parties — including companies, shareholders, family members, and other individuals conducting business activities. The main considerations are presented below.
1. Legal basis – individuals are also subject to transfer pricing rules
While many taxpayers associate transfer pricing primarily with corporate income tax (CIT) and large corporate structures, it is important to remember that the Personal Income Tax (PIT) Act also contains extensive regulations in this area in Poland. The legislator is clear: individuals may be subject to documentation and reporting obligations similar to those imposed on corporate entities.
A key issue, therefore, is determining when a relationship arises between parties that may cause a transaction to be classified as controlled. In the case of individual taxpayers, such relationships may result from various circumstances that are not always directly connected with business activity. These include, for example:
- family relationships – for example, granting a loan to a company in which the taxpayer’s spouse serves as a member of the management board,
- indirect relationships – may arise, for example, where a taxpayer enters into a lease agreement with an entity belonging to a group controlled by an investment fund in which a family member serves on the supervisory board. Unlike direct personal or capital links, indirect relationships are created through a chain of connections involving multiple entities or individuals. As a result, the existence of such relationships may not be immediately apparent. In practice, these multi-layered structures can be difficult to identify, and taxpayers may not realize that a combination of seemingly distant connections can ultimately constitute a related-party relationship for transfer pricing purposes.,
- personal links – for example, executive or supervisory roles in the counterparty,
- capital links – for example, holding shares or other ownership interests in an entity with which transactions are concluded,
- actual ability to influence business decisions – even where such influence is not formally reflected in ownership structures, corporate documents, or governance arrangements.
These types of relationships—arising not only in everyday business operations but also in private or family contexts—may trigger transfer pricing obligations. It is therefore essential to analyse both the nature of the transaction and the relationships between the parties in order to determine whether documentation and reporting requirements may apply. This is particularly important because such obligations can arise even where one of the parties does not conduct business activity — for example, when a private individual grants a loan to a company owned or managed by a family member.
2. Most common non‑standard (and problematic) cases in practice
In practical advisory work, it quickly becomes apparent that transactions involving individuals may be not only numerous but also far less obvious than taxpayers expect. Below are selected examples frequently encountered in practice under Polish regulations:
- Loans granted by an individual shareholder
At first glance, such transactions may appear straightforward. In reality, however, they are among the most commonly documented — and simultaneously one of the most frequently overlooked — types of controlled transactions. Many taxpayers perceive shareholder loans as purely internal or technical arrangements requiring little attention, whereas under transfer pricing regulations they may constitute fully fledged controlled transactions – subject to documentation and reporting obligations.
- Lease of property to one’s own company
This is a classic scenario, particularly in family-owned businesses. An individual leases property to a company in which they hold shares, perform a management role, or which is owned by close family members. Although commercially natural and common in practice, such arrangements qualify as related-party transactions for transfer pricing purposes. Consequently, it may be necessary to determine arm’s length rental conditions and, in many cases, prepare full transfer pricing documentation.
- Transfers of trademarks or know‑how
Transactions involving intellectual property rights typically attract increased scrutiny from tax authorities. Their valuation is often complex and requires a significant degree of professional judgment. For this reason, reliable valuation methods and benchmarking analyses are essential—including in transactions involving individuals.
- In‑kind contributions and restructurings
Non‑cash contributions, particularly those involving intangible assets, are especially sensitive from a transfer pricing perspective. Their value frequently exceeds statutory documentation thresholds, which may result in both documentation obligations and the requirement to report the transaction in the TPR‑P form.
- Free‑of‑charge guarantees granted by individuals
This is another example of an arrangement that may appear merely formal, yet still give rise to significant transfer pricing obligations. If an individual provides a guarantee for a company owned or managed by a family member — even without remuneration — the arrangement may constitute a controlled transaction. Importantly, the absence of compensation does not eliminate the requirement to assess whether the transaction complies with the arm’s length principle, and the transaction value (the guarantee amount in the case of a guarantee) may exceed the documentation threshold.
3. When does an individual need to prepare transfer pricing documentation?
The obligation to prepare local transfer pricing documentation arises when transactions concluded by individuals exceed the thresholds specified in Article 23w of the PIT Act. These thresholds differ depending on the nature of the transaction, meaning that separate limits apply, for example, to services, loans, or financial transactions.
There are no simplified solutions in this area. Identifying transactions is merely the first step. Determining which transactions require documentation in a given tax year involves a detailed analysis of the applicable obligations, including transaction values, the nature of the relationships between parties, and the availability of potential exemptions.
4. TPR‑P – reporting obligations for PIT taxpayers
Transfer pricing documentation is only one element of the overall compliance framework. Individuals may also be required to submit the TPR‑P form, i.e. the transfer pricing information return applicable to PIT taxpayers.
Importantly, the obligation to file TPR‑P is separate from the obligation to prepare transfer pricing documentation. As a general rule, the form must be submitted within 11 months following the end of the relevant tax year.
5. Most commonly overlooked issues
In practice, recurring risk areas can be observed among PIT taxpayers. Many of these issues stem from assumptions that may appear reasonable at first glance, yet do not always reflect the actual requirements of transfer pricing regulations.
The most common pitfalls include the belief that transfer pricing rules apply exclusively to companies, the assumption that tax authorities pay little attention to individuals, and the incorrect application or misunderstanding of documentation exemptions.
This clearly demonstrates the importance of approaching transactions involving individuals in a conscious and well-informed manner — particularly since documentation and reporting obligations may arise even in situations that appear purely formal, private, or family-related.
6. Summary – key takeaways
Transfer pricing is no longer an issue affecting only large corporations and complex group structures. Increasingly, the regulations also apply to individuals — including those who do not conduct business activity. In practice, even seemingly straightforward arrangements, such as granting a loan, leasing property to a family member’s company, or providing a guarantee, may trigger transfer pricing obligations.
Related-party relationships are not always obvious. They may result not only from family ties or ownership links, but also arise indirectly through more complex chains of relationships involving multiple entities or individuals. Consequently, even arrangements that appear informal or insignificant at first glance may qualify as controlled transactions for transfer pricing purposes.
As illustrated above, many everyday activities undertaken by individuals — including loans, in‑kind contributions, property leases, guarantees, or transfers of intellectual property rights — may exceed statutory thresholds and give rise to documentation and TPR‑P reporting obligations. Importantly, these requirements result directly from legal regulations rather than from a common-sense assessment of the transaction’s significance.
For this reason, it is advisable to review both transactions and relationships carefully, including those that may appear purely private or formal in nature. A proper understanding of these connections can help avoid unexpected compliance risks, particularly since transfer pricing obligations often arise in situations where taxpayers least anticipate them.
It is also important to remember that even where a transaction has been conducted on arm’s length terms, formal shortcomings — such as the absence of required documentation or inaccuracies in TPR-P reporting — may still result in fiscal penal liability.
Therefore, if you engage in transactions with related parties — even ones that appear entirely ordinary — it is worth verifying whether transfer pricing regulations apply. Should you wish to ensure that your obligations have been fulfilled correctly and safely, we will be pleased to assist you. Please feel free to contact us.
This article was prepared by Enodo Advisors, a Member of the Quantera Global Network. Enodo Advisors is based in Poland and is specialized in Polish Transfer Pricing while providing a broad tax services offering in Poland.
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