KEY IMPORTANT CHANGES IN POLISH TAX LEGISLATION - BAKER MCKENZIE
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Key important
changes in Polish tax
legislation
2019Area Current regulations After the change Impact
Exit tax • No such regulations in Polish tax system in • General: Exit tax will be imposed both on all taxpayers in case • New provisions may be perceived
place. of: (i) transfer of assets, (ii) change of tax residence or (iii) as another powerful fiscal tool,
transfer of permanent establishment of a taxpayer outside the thus any future international
territory of Poland. transfer of assets (including
• Tax basis: Positive difference between market and tax value donations, in-kind contributions
of assets. etc.) should be carefully analysed
and well thought taking into
• PIT/CIT tax rates: 19% PIT/CIT (3% in PIT if the tax value of an account possible tax effects
asset is not determined). thereof.
• Payment: Tax would have to be paid by 7th day of the month
following the month in which (i) with respect to CIT – income
subject to exit tax was created, (ii) with respect to PIT - market
value of transferred assets exceeded PLN 4m. Dedicated tax
return should be filled in the same timeframe.
• Refund: Only possible with respect to PIT (provided within 5
years from exit the residency will be changed back to Polish /
transferred assets will return to Poland).
Withholding tax • In general, certain payments abroad (e.g. • General: In case of payments exceeding in one tax year PLN • The taxpayers should anticipate
interest, dividends, royalties, payments for 2m to one foreign recipient withholding tax will have to be the impact of changes on their
advisory / legal / marketing services) are collected by the payer in full amount (19%/20%) – no reduced cash-flows and check legal
subject to withholding tax rate in Poland at rates or tax exemption would be possible. documentation with foreign
20% (e.g. interest) or 19% (dividends) rate. • Tax refund: Foreign recipient (as a taxpayer/ or in certain partners in terms of „gross-up”
• However, under certain conditions a reduced cases Polish tax remitter) will have the right to ask for a refund clauses.
tax rate or tax exemption may apply. to the Polish tax authorities. Except for documentation • The approach towards new
supporting the payment when asking for refund a taxpayer changes should be agreed,
would need to evidence that conditions to apply reduced considering: (i) if the special
rates or tax exemption existed (this may include among other opinion needs to be obtained, (ii)
business substance proof). Tax should be refunded within 6 if submitting of the statement may
months since the refund application is filed. expose to penal fiscal liability risk,
• Exception: In specific cases the Polish tax remitter will be (iii) if the tax refund related
allowed to apply the reduced rate or tax exemption at the procedures are possible to be
moment of payment: (i) by submitting a written statement to implemented.
the tax authority (under pain of criminal fiscal liability) that it
holds all documentation required to apply the reduced tax
rate / exemption as well as confirming, that all additional
requirements have been met (i.a. regarding the business
substance of the recipient) or (ii) by obtaining a special
opinion from the tax authority authorizing to apply a tax
exemption (such opinion should generally give protection for
3 years).
• Currently, the government works on the secondary bill of law
aimed to postpone fully entry into force of the above
regulations till 30 June 2019 and partly limit the application as
regards certain groups of taxpayers / tax agents.
The new regulations will enter into force on 1 January 2019
© 2018 Baker & McKenzie Krzyżowski i Wspólnicy spółka komandytowa 1Area Current regulations After the change Impact
IP Box • No similar Polish tax regulations in place (to • Preferences for innovation activities: Income resulting from • In order to benefit from this
some extent similar is a state aid for research commercialization of created, developed or improved incentive, the taxpayer should (i)
and development, but it is a relief only for intellectual property rights (e.g. patents) should be taxed with monitor, if its business activities are
certain costs incurred by a taxpayer). a preferential 5% CIT or PIT rate. directly related to creation,
• Eligible income: Special formula would have to be used to commercialization, development
calculate income subject to this preferential taxation which or improvement of IP rights and (ii)
basically depends on the types of costs incurred for research keep detailed accounting records
and development. presenting qualified costs and
revenues.
Tax rulings • As a rule, taxpayers may request a ruling on • Under the new regulations it will be explicitly forbidden to • The taxpayers should review their
the tax treatment of a specific transaction. A apply for tax rulings regarding any provisions related to tax tax rulings in order to assess, to
taxpayer enjoys full protection based on the avoidance matters (i.e. both General Anti Avoidance which extent they may be
ruling provided that it relates to tax Regulations as well as other existing abuse clauses, e.g. on perceived as falling under new
implications that arise after the ruling is taxation of mergers or dividends). Also, any tax rulings regulations and, in consequence,
obtained and the taxpayer follows the regarding these areas obtained by the taxpayers in the past what areas may be exposed as
standpoint expressed in the ruling (assuming will expire on 1 January 2019. no longer benefitting from the tax
that the presented background fully reflects ruling protection would be
reality). available.
Tax penalties • If irregularities are identified during a tax audit • Additional tax penalties: Under the new law a sanction in the • Internal tax risk management
(also based on the tax avoidance form of an additional liability of 10% (with respect to CIT / PIT) policy should be reviewed
regulations), any tax benefits can be denied or 40% (other taxes) of the tax liability assessed by the tax considering new potential
and additional tax liabilities with penalty authorities based on the General Anti Avoidance Regulations exposures.
interest can be imposed. Separately, penal or other anti-abuse clauses, transfer pricing settlements and
fiscal liability may apply depending on withholding tax cases (see above)
particular case. • The above additional penalty payment rate may be
substantially increased in certain cases.
Notional interest • No similar Polish tax regulations in place. • Additional tax costs: Possibility to deduct from the taxable • Impact of these regulations should
deduction base of the hypothetical costs of obtaining external funds in be considered during analyses of
case the company receives funding in the form of additional available funding scenarios.
payments to equity or retained profits are used.
• Capital financing costs cannot exceed PLN 250ths in the tax
year. This mechanism is to apply from 2020 (including also
retained earnings from 2019).
CIT rate • Currently, the standard CIT rate is 19%. A • CIT rate of 9% should be, in general, available for taxpayers • The taxpayers should monitor, if
reduced CIT rate of 15% is applicable to which will keep the status of ”small taxpayer” (i.e. whose their revenue level would allow
”small taxpayers” earning revenues irevenue both in the preceding as well as in the current tax them for applying the reduced 9%
equivalent to EUR 1.2m or less and for year does not exceed the PLN equivalent of EUR 1.2m). The CIT rate.
taxpayers starting a new business for their first reduced rate does not apply to income from capital gains.
tax year.
The new regulations will enter into force on 1 January 2019
© 2018 Baker & McKenzie Krzyżowski i Wspólnicy spółka komandytowa 2Area Current regulations After the change Impact
Mandatory • No similar Polish tax regulations in place. • New regulations introduce an obligation to notify the head of the • The taxpayers should (i) review the
Disclosure Rules National Tax Administration about the details of applied tax implemented / planned tax
schemes. The notification should be done, in general, by tax arrangements and discuss with
advisers, legal advisors, advocates and other experts (called advisors to which extent disclosure
promotors), but also in certain situations by taxpayers themselves. in such a case is mandatory and
The notification should outline details of the tax arrangements / (ii) prepare required reporting
tax schemes with estimation of expected tax benefits. policies so that they will be ready
• The notification duties should not apply to the local (Polish) tax to meet the new requirements
schemes if taxpayers revenues/costs or total assets do not exceed starting from 2019.
EUR 10m or if the market value of assets or rights covered by the
tax scheme is below EUR 2.5m.
• Deadlines: (i) cross-border tax schemes implemented between 25
June 2018 - 1 January 2019 should be reported until 30 June 2019
by the promotors and until 30 September 2019 by the taxpayers (if
the promotors will not report), (ii) domestic tax schemes
implemented between 1 November 2018 - 1 January 2019 should
be reported until 30 June 2019 by the promotors and until 30
September 2019 by the taxpayers (if the promotors will not report).
Starting from 1 January 2019, tax schemes should be reported
within 30 days after the day when the scheme is: (i) available for
the client, (ii) ready for implementation, or (iii) started, whichever
is sooner.
• The above-notification in certain cases would also have to be
done by other persons (like banks, financial advisors, etc.) which
are assisting implementation/execution of the tax scheme.
• In addition, taxpayers that implemented a tax scheme and
realized certain tax benefit should make special statement to the
tax office within the deadline to submit tax return for the period in
which the above tax scheme and tax benefit occurred.
The new regulations will enter into force on 1 January 2019
© 2018 Baker & McKenzie Krzyżowski i Wspólnicy spółka komandytowa 3Area Current regulations After the change Impact
Minimum tax on • From 1 January 2018 a minimum tax on • Minimum tax will apply to all buildings (with an exception for • The taxpayers should assess the
commercial real commercial real estate, including residential buildings leased under social housing programs) impact of new changes on their
estate shopping malls, department stores, subject to lease regardless of their type. business activity, in particular with
independent shops and boutiques, other • The tax would apply only to leased buildings (i.e. no tax on respect to (i) the buildings
commercial and service buildings and vacant buildings or parts of buildings) – this amendment would covered by minimum tax and (ii)
office buildings (excluding public also apply retroactively in 2018. the application of minimum PLN
buildings) was introduced. The tax is 0.42% 10m threshold.
of the acquisition cost of the building per • The minimum threshold of PLN 10m, currently applicable to each
building separately, would be applicable to a whole portfolio of • Also retroactive effect of the
year (applicable to the excess of the selected new regulations should
initial tax value of the building over PLN buildings possessed by a given taxpayer.
be assessed.
10m, excluding cost of land and • The minimum tax shall be reimbursed (assuming excess of
movables). It is possible to offset the tax minimum tax in a given year over "regular" CIT liability) if the tax
due against "regular" CIT. authority confirm that there were no irregularities in the amount of
"regular" CIT liability (in particular debt financing costs of the
acquisition or construction of the building were in line with market
conditions). This change would retroactively apply to the
minimum tax for 2018.
• An anti-avoidance clause will be introduced to apply when a
taxpayer disposes of or leases his building out in whole or in part
without good commercial reasons in order to avoid the minimum
tax.
Transfer pricing • The TP documentation in Local File / • Reduction of the scope of TP documentation obligations: • TP is already one of the major
(”TP”) Master File format already applicable increase the transaction value thresholds - PLN 2m exempt for areas of audits for multinational
from FY 2017. services, PLN 10m for sale of goods and financial services; entities operating in Poland. New
• Details required in the TP documentation unification of the required scope of Polish documentation with TP regulations may allow to
under the current Polish regulations often OECD standards; extending deadlines for preparation of the TP decrease the documentation
exceed OECD standards. documentation: 9 months after the end of the documented tax burden especially related to small
year for local file. and simple
• Simplification of rules applicable to low-value adding services and transactions. However, at the
loans: introduction of the cost + 5% margin safe harbour for low- same time, the new regulations
value adding services, safe harbour interest levels for loans to be may allow tax authorities more
published by the Ministry of Finance. efficiently select taxpayers for
audits and may in practice result
• Increased focus on tax planning and restructurings: Direct in even increased TP audit
introduction of the possibility of disregarding the transaction or its pressure in case of complex
reclassification in the absence of economic justification. transactions and restructurings.
• Introduction of conditions for the application of the transfer
pricing adjustments.
• Electronic simplified TP-reporting will replays the current CIT/TP and
PIT/TP forms.
The new regulations will enter into force on 1 January 2019
© 2018 Baker & McKenzie Krzyżowski i Wspólnicy spółka komandytowa 4Area Current regulations After the change Impact
Other • The draft bill introduces numerous other • WHT on Eurobonds: no withholding tax will apply to any interest or • The taxpayers should assess to
amendments, of which some are already premium (i.e. discount) received by non-Polish tax residents in which extent the particular
regulated in the Polish tax provisions. respect of bonds issued and admitted to trading on: (i) a regulations could impact their
regulated market (such as the Warsaw Stock Exchange or London business activity.
Stock Exchange); (ii) an alternative trading system (for example • With respect to Eurobonds, new
multilateral trading facilities such as Turquoise). Each of these provisions will facilitate issuance of
markets has to be located either in Poland or a country with Eurobonds directly by the Polish
which Poland has signed a double tax treaty with. Tax exemption companies or SPVs located in
only applies to bonds (i) issued after 31 December 2018, (ii) with a Poland. Under such new structures
redemption period of 1 year or longer; and (iii) where related tax risks could be
entities do not hold more than 10% of the bonds. In the case of effectively mitigated. Also
bonds issued prior to 1 January 2019, issuers can choose between issuance of bonds placed on the
the current regulations (i.e. with tax withheld at source) or a new Polish regulated and alternative
form of taxation shifting the obligation to pay tax to the issuer. markets will be more effective tax
• Costs of receivables trading: The new provisions should enable wise.
taxpayers to recognize the full amount of the cost, up to the
amount of taxable revenue derived.
• Cryptocurrencies: introduction of new rules relating to so-called
virtual currencies. This area has not been regulated for tax
purposes in Poland so far.
• New solidarity tax: Individuals with a tax year income exceeding
PLN 1m will be obliged to pay solidarity tax at the rate of 4% on
the excess of this amount. The new tax will be imposed on income
received from employment (and other sources taxed according
to the progressive tax rates), business activity income (including
one taxed at the 19% flat rate) and certain categories of capital
gain income (with the exclusion of the dividend and interest
income).
• Tax losses: the taxpayers will be allowed to utilize up to PLN 5m of
a tax loss incurred in a given tax year based on a one-off basis (in
the five-year period). General rules (uner current wording of the
tax law) will apply to the excess amount over PLN 5m.
• Participation exemption for alternative investment companies:
capital gains realised on disposal of shares in qualified
shareholdings (direct participation of 10% or more for at least 2
years) should be CIT exempt.
The new regulations will enter into force on 1 January 2019
© 2018 Baker & McKenzie Krzyżowski i Wspólnicy spółka komandytowa 5Your dedicated Team:
Sławomir Boruc Piotr Wysocki
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@bakermckenzie.com @bakermckenzie.com
Katarzyna Kopczewska Tomasz Chentosz
Partner Counsel
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@bakermckenzie.com @bakermckenzie.com
Michał Maj Krzysztof Flis
Counsel Senior Associate
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@bakermckenzie.com @bakermckenzie.com
Piotr Maksymiuk Piotr Tatara
Senior Associate Senior Associate
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Jolanta Kowalczyk-Buszko Katarzyna Lisiewska
Associate Associate
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@bakermckenzie.com @bakermckenzie.com
Michał Nocoń
Associate
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E: michal.nocon
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www.bakermckenzie.com
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