All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Poland: Changes for limited partnerships lead 2021 tax developments

Sponsored by sponsored-firms-mddp.png
Poland has adopted a range of changes concerning the taxation of doing business in the country

Monika Marta Dziedzic of MDDP summarises the key elements that businesses and taxpayers in Poland should anticipate following the announcement of a range of tax regulations in November 2020.

Through the updated regulations in November 2020, Poland has adopted a range of major changes concerning the taxation of doing business in the country.

The changes include the double taxation of some partnerships; deferral of corporate income tax (CIT) for small companies owned by individuals; an obligation to publish tax strategies by large companies; and a new model of taxation for real estate companies.

Limited partnerships

The most revolutionary amendment imposes the status of ‘corporate profits taxpayer’ on limited partnerships (spolka komandytowa) with a seat or place of management in Poland, which so far had been tax transparent.

The model will mean a double taxation, firstly on the level of the partnership’s profit, and secondly at the level of profit distribution to the partners. Limited partners will be entitled to an exemption of 50% of received distributions, but only up to approximately €15,000 ($18,159) per year per limited partnership.

Unlimited partners will be entitled to credit proportionally for the entire income tax paid by the partnership, but only within five years. Thus, the new system will differentiate the tax position of limited and unlimited partners. The above regulations enter into force on January 1 2021 but limited partnerships may decide to only apply them from May 1 2021, and continue the tax transparent treatment until the end of April 2021.

These rules will apply to general partnerships (spolka jawaa) but only if the partners are not individuals, or if the taxpayers participating in their profits are not disclosed. General partnerships with disclosed partners will still be tax transparent.

Deferral of corporate income tax

Lump sum taxation, being a sort of deferral of income tax to the moment of dividend distribution, will apply to companies which select such a system for four years. Companies will have to be owned by individuals, have an annual turnover in the preceding year of up to approximately €25 million, and cannot have participation in other entities and passive income exceeding 50% of turnover.

There are plenty of other requirements and conditions for this system to apply, including consideration of employment, and investments in new assets, among other factors. Thus, one should carefully check if the company qualifies for the tax deferral.

Other major developments

Companies with a turnover exceeding €50 million per year, and tax capital groups, will be obliged to prepare and publish strategy reports on the execution of their tax policy on their websites, within 12 months after the end of the tax year.

Real estate companies will have a series of new duties to comply with. For example, when the shareholder sells their shares, it will be the real estate company that has to pay the capital gains tax. Some real estate companies will be obliged to appoint a formal tax representative, and many will have to report information about their shareholders (where there is more than 5% participation).

Entities operating in special economic zones (SEZs) will not be entitled to change the depreciation rates for new assets.

Losses carried forward will not be possible after further reorganisations.

Transfer pricing documentation will be required when the beneficial owner of the party to the transaction is from a tax haven.

A reduced 9% CIT rate will apply to companies with a turnover of up to €2 million (increased from €1.2 million).




Monika Marta Dziedzic

T: +48 22 322 68 88

E: monika.dziedzic@mddp.pl

More from across our site

Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
12th annual awards announce winners
Businesses need to improve on data management to ensure tax departments become much more integrated, according to Microsoft’s chief digital officer at a KPMG event.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree