Poland: Revolutionary Changes In CIT, PIT And Tax Ordinance In Poland

The Ministry of Finance has published extensive draft amendments to the CIT, PIT and Tax Ordinance Act aimed at tightening up the tax system. They include also a number of regulations aimed at simplifying regulations and creating tax preferences.

Selected changes with a short commentary are set out below.

Solutions to seal the tax system

  1. Introduction of tax on income on unrealized profits (exit tax), concerning cross-border transfer of assets within the same taxpayer. The taxable basis will be the sum of income from unrealized gains established for individual assets. In turn, the income from unrealized gains will be the surplus of the market value of the transferred assets determined as at the date of transfer (e.g. as a result of a change of tax residency) over their tax value. Two tax rates will apply to PIT taxpayers - 3% if the tax value of the asset will not be determined and 19% in other situations. The tax rate should be 19% for CIT taxpayers,
  2. Introduction of the obligation for tax advisors, legal counsel, attorneys and other experts to to provide tax authorities with information on tax schemes implemented by their clients (MDR: Mandatory Disclosure Rules). If the advisor pleads professional secrecy, the client himself will have to notify the optimization to the tax authorities. In a new departure, information of this nature will have to be provided by the end of March 2019 and the schemes made available or implemented in the period 25 June 2018 through 31 December 2018 will be subject to disclosure.
  3. Changes in withholding tax (WHT). The current approach of granting preferential treatment ‒ e.g. by applying a preferential rate or exemption under a relevant double tax treaty or provisions of the CIT Act implementing EU Directives without prior verification ‒ will be changed to the mechanism of the tax remitter (i.e. the Polish company) first collecting and paying WHT calculated with the use of the nominal rates. Only afterward the WHT will be refunded on request after the tax authority checks on the possibility of applying preferential treatment. This change will only apply to payments in excess of PLN 2 million per year per recipient.

    At the same time, the draft provisions introduce two simplifications, thanks to which even if the proposed threshold is exceeded (i.e. PLN 2 million), Polish company will be entitled to apply preferential WHT (relief at source).

    The first simplification will apply when the tax remitter (i.e. Polish company) submits a declaration to the tax authority (on pain of criminal liability and other sanctions) that it holds all documents required by tax law authorizing it to apply preferential taxation (e.g. reduced rates set out in the double tax treaty). This declaration will also include confirmation of no knowledge about any circumstances that might exclude the possibility of not charging WHT on the basis of tax law.

    The second simplification will only apply to exemptions implementing the provisions of EU directives exempting certain payments from WHT. This simplification is based on the application of preferences on the basis of an opinion issued by the tax authority on the application of the exemption (it therefore provides that the authority will examine up front whether the exemption for dividends or interest paid to an EU shareholder can be used).

    The definition of beneficial owner will also be clarified.

    The main purpose of these changes is to check the conditions (criteria) of using non-residents from the angle of preferential taxation of interest, dividends, royalties or other income (revenues) subject to preferential withholding tax in Poland under double tax treaties or exemptions resulting from implementing solutions in EU directives, and prevention of irregularities in the settlement of WHT, for example paying interest to a taxpayer who does not meet the criterion of beneficial owner. This change could significantly impact the tax efficiency of paid dividends, interest payments and royalties.

  4. Changes regarding the general anti-avoidance regulations (GAAR), including the possibility of applying GAAR to tax remitters, clarifying the reasons for refusal to issue a tax interpretation and introducing a series of changes aimed at improving the economy of proceedings against tax avoidance. New sanctions are planned in the form of additional tax liability if the tax authorities deem GAAR regulations are applicable in a given case.
  5. Changes in regulations on taxation of foreign controlled companies (CFCs). The changes aim to increase the efficiency and precision of these provisions, including towards foreign entities unknown to the Polish legal system or operating under a completely different legal solution. This applies in particular to foreign foundations and trusts and similar entities / legal titles.

Solutions aimed at simplifying regulations and creating tax preferences.

  1. Introduction of the provisions of the Intellectual Property Box (IP BOX) / Innovation Box) in the PIT and CIT Act providing for taxation at a 5% income tax rate for entrepreneurs who receive income from commercialization of intellectual property rights created or developed by them (a separate alert will deal with this issue).
  2. Reduction of the CIT rate to 9% in relation to income (income) other than from capital gains achieved by taxpayers whose income in a given tax year did not exceed the PLN equivalent of EUR 1,200,000 and whose profitability does not exceed 33%.
  3. Introduction of the possibility of including hypothetical costs of acquiring external capital in tax deductible costs, if the company's financing source are additional payments paid by partners or retained earnings (notional interest deduction).
  4. Introduction of an alternative method of WHT taxing of interest on bonds with maturity of at least one year admitted to trading on a regulated market or introduced to the alternative trading system in the meaning of the Act of July 29, 2005 on Trading in Financial Instruments.
  5. Introduction of special solutions for purchasers of debt portfolios.
  6. Introduction of detailed regulations regarding taxation of income from virtual currencies.
  7. Raising up to PLN 150,000 the value limit of a car, to which it is possible to fully deduct depreciation charges for car use and consolidating tax rules for the business use of cars, irrespective of the contractual basis for use.
  8. Change in the rules for settling the costs of using cars for business and non-business use.
  9. Determination of the amount of tax deductible costs recognized in connection with debt-to-equity conversion.

Substantial modifications have also been made to the following provisions:

  • heirs selling real estate or specific property rights acquired in inheritance,
  • conditions for using housing relief,
  • scope of exemption from PIT and CIT tax regarding sale of all or part of the real estate belonging to a farm,
  • amounts of limits classified as tax deductible expenses for organizations of an optional nature associating employers and entrepreneurs,
  • rules for settling loans concerning securities.

Please note that the above list does not present all the proposed changes, because their scope is very extensive. The draft amendment runs to more than 150 pages, while the justification for this amendment is over 200 pages.

The amended provisions will generally apply to settlements from January 1, 2019. Currently, the draft amending act has been submitted to public consultation, but the deadline for submitting comments is only 14 days. The draft regulations may be subject to changes during the legislative process. However, most of the proposed changes will be expected to come into force.

Taking into account the scope and significance of the proposed changes, we recommend carrying out a detailed analysis in terms of the possible impact on your business and making any necessary adjustments. Please contact us if you are interested in our support.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions