Poland country profile

Poland country profile

Key tax factors for efficient cross-border business and investment involving Poland.

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EU Member State

Yes


Double Tax Treaties

With:

Albania  Egypt 
Jersey(a)  Nigeria  Syria 
Algeria  Estonia  Jordan  Norway  Tajikistan 
Armenia  Ethiopia  Kazakhstan  Pakistan  Thailand 
Australia  Finland  Kuwait  Philippines  Tunisia 
Austria  France  Kyrgyzstan  Portugal  Turkey 
Azerbaijan  Georgia  Latvia  Qatar  Ukraine 
Bangladesh  Germany  Lebanon  Romania  UAE 
Belarus  Greece Lithuania  Russia  UK 
Belgium   Guernsey(a)  Luxembourg  Saudi Arabia  Uruguay 
Bosnia and  Hungary  Macedonia  Serbia  US 
Herzegovina  Iceland  Malaysia  Singapore  Uzbekistan 
Bulgaria  India  Malta  Slovakia  Vietnam 
Canada  Indonesia  Mexico  Slovenia  Zambia 
Chile  Iran  Moldova  South Africa  Zimbabwe 
China  Ireland  Mongolia  South Korea   
Croatia  Isle of Man  Montenegro  Spain   
Cyprus  Israel  Morocco  Sri Lanka   
Czech Rep.  Italy  Netherlands  Sweden   
Denmark  Japan  New Zealand  Switzerland   

Most important forms of doing business

Capital companies (S.A., sp. z o.o.), Partnerships, Branches, Rep. Offices.

Legal entity capital requirements

S.A. - PLN 100,000, Sp. z o.o. - PLN 5,000.

Residence and tax system

A company is resident if either its legal seat or its place of management is located in Poland. Resident companies are taxed on their worldwide income.
Non-resident companies are taxed only on their Polish source income.

Compliance requirements for CIT purposes

  • Fiscal year is generally a period of 12 consecutive months;
  • Monthly tax advance payments should be made (simplified monthly advances equal to 1/12 of the previous year tax due possible);
  • No filing obligation during the year;
  • Annual tax return should be filed and the remaining balance paid within three months after the end of each tax year.

Corporate income tax rate

The standard corporate income tax rate is 19 percent.

Withholding tax rates

on dividends paid to non-resident companies

19 percent (dividend payments to EU, EEA and Swiss parent companies exempt subject to: Minimum holding requirement: 10 percent (25 percent for
Switzerland);

Minimum holding period: 2 years.

Reduction of WHT applicable under DTTs

on interest paid to non-resident companies

20 percent (exemption on payments to specific EU/EEA and Swiss-related companies available from July 1, 2013).

Reduction of WHT applicable under DTTs.

on patent royalties and certain copyright royalties paid to non-resident companies

20 percent (exemption on payments to specific EU/EEA and Swiss-related companies available from July 1, 2013).

Reduction of WHT applicable under DTTs

on fees for technical services

20 percent for the use of, or the right to use, industrial equipment, including means of transport, commercial or scientific equipment, or for the use of knowhow (exemption on payments to specific EU/EEA and Swiss-related companies available from July 1, 2013).

Reduction / exemption of WHT applicable under DTTs.

on other payments

20 percent, unless DTT provides otherwise, on payments for intangible services (accounting, marketing, HR, management, etc.).

20 percent on payments for services provided by foreign entities in the area of entertainment or sports performed/organized through natural or legal persons engaged in the area of artistic events, entertainment or sports on Polish territory.

Reduction / exemption of WHT applicable under DTTs.

branch withholding taxes

No

Holding rules

dividend received from resident/non-resident subsidiaries

  • Credit method. Underlying credit available for non-EU and non-EEA treaty countries except Switzerland:

– Minimum holding requirement: 75 percent;

– Minimum holding period: 2 years.

  • Participation exemption for dividends from Polish subsidiaries and subsidiaries located in EU Member States, EEA states and in Switzerland, provided that:

– Minimum holding requirement: 10 percent (25 percent for Switzerland);

– Minimum holding period: 2 years.

capital gains obtained from resident/non-resident subsidiaries

Generally taxable.

Tax losses

Losses may be carried forward for five years. Up to 50 percent of the
loss may be offset in each year. Loss carry back is not allowed. 

Tax consolidation rules/Group relief rules

Resident companies with an average share capital of at least PLN 1,000,000 may form a fiscal group. It must be formed for at least 3 years. Additional requirements:

  • The parent company must hold 95 percent of the shares in the subsidiaries; 
  • The subsidiaries may not hold shares in the other companies of the group;
  • The companies may not be exempt from corporate income tax;
  • The annual ratio of net income to gross income must be above 3 percent.

Registration duties

Capital duty on incorporation of a company and on share capital increase (0.5 percent of share capital or increase of share capital). Capital allocated to share premium is not taxed.

Transfer duties

On the transfer of shares

20 percent, unless DTT provides otherwise, on payments for intangible services (accounting, marketing, HR, management, etc.). 20 percent on payments for services provided by foreign entities in the area of entertainment or sports performed/organized through natural or legal persons engaged in the area of artistic events, entertainment or sports on Polish territory. Reduction / exemption of WHT applicable under DTTs.

On the transfer of land and buildings

2 percent if not subject to VAT or VAT exempt.

Stamp duties

Yes, on some legal actions as issuance of the certificate or submitting a power of attorney.

Real estate taxes

Yes, the tax rates are set by the local authorities, subject to the maximum rates.

Controlled Foreign Company rules

Yes (CFC legislation in force since January 1, 2015).

Transfer pricing rules

General transfer pricing rules

OECD Guidelines apply. APA available. 

Documentation requirement

For most related party transactions statutory transfer pricing documentation required within 7 days upon request (any transfer pricing adjustments taxed at 50 percent if no documentation).

Thin capitalization rules

Old thin cap rules

Under the grandfathering clause, the old thin cap rules still apply to loans granted before January 1, 2015 provided the loan (money) has actually been transferred to the borrower before that date, which should be understood as a physical transfer.

Interest paid on a loan is non-deductible in proportion to the amount exceeding the debt-to-equity ratio of 3:1, if the loan is granted:

  • by a shareholder holding directly at least 25 percent of the share capital or by a group of shareholders holding directly in total at least 25 percent of the share capital; or
  • between companies in which the same company holds directly at least 25 percent of the share capital of both the lending and the borrowing company.

New thin cap rules

New thin capitalization rules took effect as of January 1, 2015.

Under the new thin capitalization rules, interest paid on a loan is non-deductible in proportion to the amount exceeding the debt-to-equity ratio of 1:1, if the loan is granted:

  • by an entity holding, directly or indirectly, at least 25 percent of the share capital or by a group of entities holding, directly or indirectly, in total at least 25 percent of the share capital; or
  • by a company that has the same shareholder as the borrower, if the shareholder holds, directly or indirectly, at least 25 percent of the share capital of both the lending and the borrowing company.

General Anti-Avoidance rules (GAAR)

When establishing the content of a legal action, tax authorities consider the intention of the parties and purpose of the legal action, and not solely the declaration made by the parties. If the legal action was illusory and the parties intended to hide the real legal action, the legal consequences will be attributed to the hidden legal action.

Rules on major GAAR proposed amendments are pending.

Specific Anti-Avoidance rules/Anti Treaty Shopping Provisions

Certain exemptions apply only if there are legal grounds for the exchange of fiscal information between Poland and the relevant State. Tax neutrality will not apply to a merger or a division if the transaction is not justified by sound economic reasons, but was to avoid tax; Specific anti-abuse clauses under DTTs. Certain transactions / arrangements specifically excluded from the Interest and Royalties Directive exemption. Tax exemption on dividends received by Polish resident companies from EU/EEA/Swiss subsidiaries does not apply if the amounts paid are tax deductible for the distributing company.

Advance Ruling system

Yes

IP / R&D incentives

From 2016: tax deduction on R&D activities (R&D tax credit) (30 percent of salaries of employees involved in research and development activity and 10 percent or 20 percent of other costs connected with R&D).

* Until 2015: 50 percent extra tax deduction on new technology expenses. * The Government is still working on proposed changes to the R&D tax credit (aimed at increasing the scope of available incentive).

Other incentives

Research and development expenditure can either be deducted in the year when it is incurred or through tax write-offs.

VAT

The standard rate is 23 percent, and the reduced rates are 0 percent, 5
percent and 8 percent. 

Other relevant points of attention

No

Contact us

Marcin Rudnicki

KPMG in Poland

T: +48 22 528 1177

E: marcinrudnicki@kpmg.pl

 

Rafal Ciolek

KPMG in Poland

T: +48 22 528 1197

E: rciolek@kpmg.pl

 

Michal Niznik

KPMG in Poland

T: +48 22 528 1377

E: mniznik@kpmg.pl

EU Tax Centre

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