The Administrative Court of Poznań, Poland issued a judgment on 11 January 2023 concerning the application of transfer pricing regulations to taxpayers under the distribution (lump sum) tax (the so-called Estonian CIT). The distribution tax regime, which is provided for in Chapter 6b of the Corporate Income Tax Act (CITA), essentially allows companies to be taxed only on profit distributions made.

The case concerned a taxpayer under the distribution tax regime, which claimed that the transfer pricing regulations should not apply under the regime, including the transfer pricing documentation and adjustment requirements in particular. For this purpose, the taxpayer sought a ruling from the tax authority for an exemption from the requirements. The main argument of the taxpayer was that the provisions of Chapter 6b provide a comprehensive and independent system of rules for the taxation of profits on distribution and, therefore, excludes other the application of other provisions of the CITA unless referred to in Chapter 6b. Since no reference is made to the transfer pricing documentation and adjustment requirements, the taxpayer argued that the requirements should not apply. The tax authority rejected the argument, holding that there is no specific exclusion. Further, one of the requirements for the distribution tax regime is that passive income and income from related party transactions without economic added value must be less than 50% of total income, which cannot be enforced without applying the transfer pricing requirements. The taxpayer appealed the tax authority's decision.

In its judgment, the Administrative Court sided with the tax authority and dismissed its appeal. In coming to its decision, the Administrative Court cited prior case law of the Supreme Court, which established that general tax provisions apply unless the parliament reservices an exception in a specific law. Since no such exception is provided in Chapter 6b in relation to the transfer pricing documentation and adjustment requirements, taxpayers under the distribution tax regime are subject to the requirements.