24 March 2023 the Polish Ministry of Finance issued Tax clarifications on transfer pricing No. 5: Resale Price Method
The resale price method (RPM) is one of the traditional transaction methods and probably most useful where it is applied to distribution operations..
Application of the RPM for determining the price of a controlled transaction begins with the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise. This price (the resale price) is then reduced by an appropriate gross margin on this price (the “resale price margin”) representing the amount out of which the reseller would seek to cover its selling and other operating expenses and, in the light of the functions performed (taking into account assets used and risks assumed), make an appropriate profit. What is left after subtracting the gross margin can be regarded, after adjustment for other costs associated with the purchase of the product (e.g. customs duties), as an arm’s length price for the original transfer of property between the associated enterprises.
The resale price method is described in:
• Chapter II, Part II, Section C, paragraphs 2.27-2.44 of the OECD Guidelines;
• Chapter 4.3 of the UN Handbook
See the previous Polish clarifications on transfer pricing:
- No. 1 – Comparability Analyses and Documenation
- No. 2 – Transfer Pricing Adjustments
- No. 3 – CUP method
- No. 4 – TNMM