The Ministry of Finance is working on the introduction of exit taxation regulations.
The necessity to introduce Polish regulations regarding exit taxation results from the Council Directive (EU) 2016/1164 (i.e. The Anti-Tax Avoidance Directive, ATAD, further referred to as “the Directive”).
Exit taxation is one of the solutions included in the Directive, the fundamental aim of which is to ensure that tax is paid where profits and value are generated.
According to the article 5 of the Directive, unrealised gains are taxed in any of the following cases:
The provisions of a), b) and d) above only apply when the state from which the assets are transferred no longer has the right to tax the transferred assets due to the transfer.
The provisions apply both to the transfer of assets to another European Union member state, as well as the transfer to a third country.
The amount of tax payable shall be equal to the market value of the transferred assets, at the time of exit of the assets (defined as the amount for which an asset can be exchanged or mutual obligations can be settled between willing unrelated buyers and sellers in a direct transaction), less their value for tax purposes.
Where the transfer of assets, tax residence or the business carried out by a PE is to another member state, that state shall accept the value established by the member state of the taxpayer or of the PE as the starting value of the assets for tax purposes, unless this does not reflect the market value.
The Directive lists specific circumstances in which the taxpayer shall be given the right to defer the payment of the exit tax by paying it in instalments over five years (interest may be charged in such cases in accordance with the legislation of the member state of the taxpayer or of the PE), as well as circumstances in which exit tax should not be charged, i.e. when the transfer of assets is of temporary nature and the assets are set to revert to the member state within 12 months.
Transfer of assets, including cash, between a parent company and its subsidiaries fall outside the scope of the rule on exit taxation.
Specific dates of the adoption and entry into force of the Polish regulations regarding exit taxation are not yet known. However, it can be expected that the legislator will strive to accelerate the works and introduce the regulations before the deadline set in the Directive.
At the current stage of works the details of the local regulations regarding exit tax are not known either.
In the light of the above, it is recommended to take into account the future changes in the area of taxation at the time of planning cross-border transactions or restructuring.
We will provide information regarding the development of legislative work in the abovementioned area. Please contact us if you would like to obtain more detailed information on the above topic.