Polish Court Upholds Arm’s Length Principle in Trademark Licensing Dispute

19 March 2025

The Polish Supreme Administrative Court addressed a dispute involving the tax treatment of trademark royalties received under a related-party licensing arrangement following an intra-group IP transfer. The tax authorities recharacterized the royalties as a different type of payment, disallowing deductions despite the absence of legal grounds under the applicable law at the time.

The Court rejected this approach, holding that the tax office had improperly applied the rules beyond their scope and failed to respect the form and substance of the transaction. It emphasized that, in the absence of specific anti-avoidance provisions, bona fide related-party arrangements must be assessed as structured, in line with the OECD Transfer Pricing Guidelines.

The Court reaffirmed that actual intercompany transactions cannot be disregarded or relabeled without clear evidence of abuse. It concluded that the taxpayer’s trademark license complied with arm’s length standards and had commercial justification. As a result, the royalties remained deductible, and the authorities were reminded to base recharacterizations on applicable law and supporting evidence.

Full English Translation: https://news.bloombergtax.com/daily-tax-report/top-polish-court-backs-taxpayer-on-trademark-transfer-pricing