Poland: Changes ahead for tax legislation from 2022

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Poland: Changes ahead for tax legislation from 2022

Sponsored by

sponsored-firms-mddp.png
New legislation proposed in relation to international tax affairs and foreign investments in Poland

Jacek Wojtach of MDDP Poland looks at the most significant 2022 international tax changes expected in Polish legislation with a particular focus on withholding tax.

Within the frames of the so-called Polski Ład (Polish Order), a complex new legislation was proposed with respect to international tax affairs and foreign investments in Poland. It will, generally, come into force on January 1 2022. Some of the changes include:

  • It shall be presumed that companies having Polish board or supervisory board members are Polish tax residents;

  • Controlled foreign companies (CFC) rules will be tightened and extended (including rise of expected foreign effective tax rate to 14.25%);

  • 19% diverted profits tax will be imposed on intangible expenses incurred from foreign taxpayers, if they are effectively taxed below 14.25% corporate income tax (CIT) rate and are further distributed as dividends;

  • New conditions shall be set out for mergers, spin-offs, exchange of shares and other reorganisations in order to remain tax neutral;

  • Liquidation of Polish tax transparent companies shall no longer be tax neutral if Poland loses its rights to tax liquidation assets;

  • 19% exit tax shall be extended to cases of ‘international transformations’ (which may be interpreted, e.g. as cross-border mergers);

  • Interest on debt financing of capital gains and profit-stripping expenses incurred for a benefit of related entities shall not be tax deductible;

  • Anti-abusive regulations will be applicable to special economic zones and CIT exemption will expressly cover only income from a zone permit activity; and

  • Apartments (including for business and rent) will not be allowed to be depreciated for tax purposes.

New incentives have also been proposed:

  • Individuals moving their tax residency to Poland, may benefit from PLN 200,000 (approximately $51,363) annual flat tax rate on foreign income, subject to certain conditions (investing PLN 100,000 per annum in Polish sports/culture/science, among others);

  • Research and development (R&D) and IP Box incentives may be used simultaneously;

  • Conditions for CIT flat taxation (the so-called Estonian CIT) and tax groupings shall be relaxed;

  • A CIT holding regime (100% capital gains and 95% dividend exemption) will be introduced for Polish corporations (10%/one year shareholding, substance of a holding and subsidiary entities and simple tier structures shall be among requirements but real estate companies will be excluded);

  • New incentives (additional deduction from tax base) shall be made for robotics investments, development of new products, some expenses on increase of sales, acquisition of non-related companies and IPO process;

  • VAT groups may be established; and

  • Investment agreement may be concluded with tax authorities on application and interpretation of laws, including transfer pricing (regards investments over PLN 100 million.

Many of the above-mentioned draft regulations are vague and raise doubts as to their interpretation and being contrary with double tax treaties and European tax legislation.

One of the focus points of new legislation are WHT issues. Rules that will be amended were initially construed for 2019, but have been suspended ever since. This regards payments exceeding PLN 2 million per annum (summed for a particular recipient). The excess over that amount will be subject to a standard 19%/20% WHT rate. If a payment qualifies for an exemption or reduced WHT treaty rate, a recipient (or in cases of gross up clause a WHT remitter) can apply for a WHT refund.

Contrary however to prior regulations, the new regime shall be applicable only to passive payments (dividends, interest, royalties) made to related, non-Polish entities. Thus, service payments and other made to non-related suppliers (including royalties) shall not be covered by it.

There will be two methods to apply for a reduced WHT rate or exemption at source. One of them will require submitting a very special statement. Any incorrect information provided in the aforementioned statement may result in a 10–30% additional WHT fee, and potentially even personal penalties. The other is to obtain an advance ruling on WHT exemption/reduced rate issued by Polish tax authorities.

All new WHT procedures will be carried out in an electronic procedure. A number of additional documents will be required, including verification of foreign taxpayer’s substance and beneficial owner status.

The number of changes and short (as usual in last few years) vacatio legis period make it very difficult to adjust to the new legislation. Also, being currently a draft, it might yet be subject to amendments, even major ones (although WHT issues are not expecting further change).

 

 

Jacek Wojtach

Senior manager, MDDP Poland

E: jacek.wojtach@mddp.pl

 

 

more across site & shared bottom lb ros

More from across our site

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article