Poland: Announcing a package for strategic investors

The proposed law to amend the personal income tax act, corporate income tax act and certain other acts dated 22 June 2021 includes the following new mechanisms / preferences:

• Interpretation 590 – 5-year agreement between the Ministry of Finance and a strategic investor covering all tax effects of investments in Poland (for investments of more than PLN 100 million),
• Polish Holding Company (PSH) – which will enable a tax exemption of up to 95% of dividend received from a subsidiary and of profits from the sale of shares in subsidiaries,
• Allowance for expansion – opportunity to deduct expenses incurred to increase income from the sale of products (including participation in fairs, promotional activities, drafting of necessary documentation). Expenses for business expansion can be deducted twice – once as tax-deductible costs and then as part of the allowance up to PLN 1 million.
• VAT on financial services – opportunity to choose VAT taxation for financial institutions.

For more information on the proposed law and pre-consultations (to be held until 30 June 2021) please visit: https://www.gov.pl/web/kas/pakiet-rozwiazan-dla-msp-i-strategicznych-inwestorow-w-prekonsultacjach.

On 18 June 2021, a proposed law to amend the corporate income tax act and certain other acts was published. The proposed law contains the following changes to regulations:

• Changes to the taxation of Tax Capital Groups (PGK) – which specifically provide for reducing the minimum share capital amount to PLN 250 000, abolishing the profitability criterion, allowing for mergers, transformations and divisions of companies, which are part of PGK, and limitation of the taxpayers’ right to reduce income by loss suffered prior to joining PGK,
• Allowance for IPO – introduction of an allowance for the issuer, which allowance will make it possible to:
  • recognise 150% of expenses directly related to going public as tax deductible (expenses of preparation of the prospectus; notarial, court, stamp duty and stock exchange costs, and drafting and publishing of announcements required by laws),
  • deducting another 50% of expenses related to tax, legal and financial advisory services directly related to the issue (max. PLN 50 thousand net of VAT).
• Consolidation allowance – introduction of an allowance enabling deduction of expenses for acquisition of another company in the year in which such shares will be purchased.
  The expenses can be deducted from income achieved in the tax year other than capital gains (max. PLN 250 thousand).
• Changes to the flat-rate tax on company income (Estonian CIT) – proposed amendment provides for significant relaxation of conditions for benefiting from the flat-rate taxation of company income, e.g. abolition of the limit of income achieved in the previous tax year (i.e. PLN 100 million) or extension of the catalogue of eligible entities to include limited partnerships and limited joint-stock partnerships.

For more information on the proposed law and pre-consultations (to be held until 25 June 2021) please visit: https://www.gov.pl/web/finanse/kolejny-pakiet-zmian-dla-msp-i-duzych-inwestorow-w-prekonsultacjach

Furthermore, the Ministry of Finance has also announced other solutions such as:

• Investor Desk – which will provide comprehensive support to strategic investors both when the decision on the investments is made and when the investment is implemented,
• VAT Groups (PGV) – introduction of PGV with the 50% share requirement and without the minimum share capital amount requirement.

These solutions are not contained in the abovementioned proposed laws. The following official information is available on the Ministry of Finance website:

• VAT Groups – https://www.gov.pl/web/finanse/grupy-vat-w-prekonsultacjach
• Investor Desk – https://www.gov.pl/web/finanse/polski-lad-przyciagnie-strategicznych-inwestorow

WTS&SAJA will keep you up-to-date on the details and the progress of the legislation.

If this issue pertains to your business and you are interested in additional information please contact our tax experts at WTS&SAJA.