Poland: VAT exemption for bonds contributed by investment fund as capital into a company in exchange for shares

News on tax developments affecting the international Financial Services industry.

This article delves into the evolving Polish WHT regulations on passive income, examining recent rulings on exemptions for dividends, interest, and royalties, impacting international industry groups.

On 28 March 2024, the Director of the Polish National Revenue Information Centre issued a private tax ruling (ref. 0111-KDIB3-1.4012.938.2023.3.IK) addressing the VAT implications of a specific transaction involving bonds issued by a fund.

Advocate General Juliane Kokott's recent opinion in Case C-18/23, delivered on 11 July 2024, has sparked concern due to her support for Poland's differential tax treatment of resident externally managed and non-resident internally managed (self-managed) investment funds.

The Polish government is currently working on amendments to the Polish Tax Code (Ordynacja podatkowa) in response to a recent ruling by the Court of Justice of the European Union (CJEU).

As remote work becomes more prevalent, companies need to be aware of the tax issues associated with their employees’ presence in foreign jurisdictions.

On 19 December 2023, the Supreme Administrative Court handed down its judgment in case number II FSK 2108/20 concerning interest on overpaid WHT for foreign investment funds.

For many years now, Poland has been introducing solutions aimed at the digitization of VAT.

The issue of mandatory beneficial owner testing in the application of WHT exemptions on dividend payments has been a bone of contention generating disputes with Polish tax authorities since 2019.

With the Polish implementation of the "SUP Directive" entering into force, businesses will now face new compliance duties aimed at reducing the environmental impact of certain plastic products.

As of 2022, Polish CIT regulations contain a new definition for beneficial owner. The Voivodship Administrative Court in Lublin examined complaints against the refusals to issue preference opinions, presenting its own assessment of genuine business activity criteria.

The status of remote work in the Labour Code has been changed to a permanent option, rather than one applicable just in relation to the COVID-19 pandemic.

Recent months have seen Polish tax regulations regarding restructurings significantly amended and further changes are also expected.

The fundamental purpose to introduce PHC regulations was to increase the attractiveness of Poland as a location for setting up holding companies.

Poland undertakes a reassessment of the preconditions for a fixed establishment.

As of 1 February 2016, Poland has had a banking tax. The tax is charged on the amount by which the taxpayer's total assets exceed the applicable statutory threshold.

The scope of changes is broad and some of them, if they finally enter into force, may have a cross-border impact.

As of 1 January 2022, pay and refund has replaced previously effective relief at source mechanism as a way of withholding tax (WHT) collection for certain types of payments made from Polish entities.

Since 1 January 2021, new TP regulations have been in force regarding the documentation of what are called indirect transactions with residents of tax havens (Newsletter #2/2021)

As of 1 January 2019, Polish law requires Polish WHT agents to exercise due diligence and verify the applicability of any tax rates other than the standard rate (preferential WHT rates) or of any exemption or forbearance of tax, which may apply under special regulations or a double tax treaty.

A new type of transaction evidence has been introduced to the Polish VAT regulations, i.e. structured invoices (colloquially called e-invoices).

On 15 November 2021, the President signed the legislative package introducing a sweeping reform of the Polish tax system, called Polish Deal (Polski Ład). The changes will come into force as of 1 January 2022.

Year 2021 was full of tax changes, most of which are going to take effect at the start of 2022. For business, then, next year will be one of implementing the changes and adjusting to the new reality.

SLIM VAT 2 is another set of changes that are supposed to simplify the VAT settlements in Poland. The first one was implemented as of 1 January 2021.

On 26 July 2021, the government published a broad legislative proposal to make important amendments in various tax laws, including income tax and VAT regulations.

On 1 September 2021 the Finance Ministry (FM) issued the guidance document in relation to VAT e-commerce package in force as of 1 July 2021.

On 31 August 2021 the Director of National Revenue Information (“Authority”) issued the private tax ruling, ref. 0111-KDIB1-2.4010.231.2021.2.MS, relating to the recognition on form TPR of domestic controlled transactions that are exempt under Article 11n(1) of the CIT Act.

The Polish Deal legislative package currently processed in the Sejm includes a proposal to introduce what is called minimum income tax (CIT Act, Article 24ca). 

On 8 September 2021 the Finance Ministry presented proposed changes to draft legislation introducing the "Polish Deal". The changes, made on the back of public consultations regarding the initial proposal (see our Newsletter 39/2021), will mainly affect the mentioned issues.

Poland plans to allow VAT groups.

The finance Ministry's representatives have published an article with first statistics based on transfer pricing reporting (form TPR) for 2019.

This is to let you know of plans to make an important amendment to the CIT Act which introduces a new test for having the place of management in Poland. This amendment, which is part of the Polish Deal package of proposed legislation, seeks to add a new provision to the CIT Act, specifically sub-paragraph 6 to be added to Article 3.

The Finance Ministry ("FM") has published Guidance of 10 August 2021 on the equalization relief under Article 27g of the Personal Income Tax Act (Journal of Laws of 2021, item 1128, as amended; the "Guidance").

The public consultations have commenced on draft Transfer Pricing Forum Recommendations on the transfer pricing implications of the COVID-19 pandemic for Polish taxpayers ("Recommendations").

For years there has been a split between administrative courts and tax authorities about the deductibility timing for what are called indirect tax costs for the purposes of corporate income tax.

The “Polish Deal” (Polski Ład) was published on 26 July 2021 (hereinafter the “Bill”).  The key change as regards VAT is the possibility to form the so-called VAT Groups for tax purposes as of 1 January 2022.

A new revision of forms TPR-P and TPR-C has been published by the Finance Ministry in the Public Information Bulletin. The new forms are used to file transfer pricing information for tax years starting after 31 December 2019.

The publication of legislation proposed to amend tax regulations to introduce the "Polish Deal". Most the changes are proposed to enter into force on 1 January 2022. For now we offer a synthetic list of the major changes.

The Polish tax authority has issued guidance on new documentation requirements for transactions involving tax havens. The article explains to what extent this has a practical effect for taxpayers.

This is to draw your attention to the regulation of the Minister for Finance, Funds and Regional Policy on the non-collection of income tax relating to forgiven debt represented by financial subsidies granted under the Financial Shields of the Polish Development Fund PFR and made non-refundable ("Regulation").

The Electronic Service of Documents Act ("ESDA"), which will replace the service of documents by traditional mail with registered electronic service, will come into force on 5 October 2021. This article summarises the key implications for businesses.

On 28 June 2021 the Finance Ministry opened a tax preconsultation process in relation to a working paper setting out proposed amendments to transfer pricing regulations. In this article you will find a summary of the major changes that have been proposed plus comments provided by WTS&SAJA in course of the preconsultation process.

In their latest newsletter, our tax experts at WTS&Saja outline the most important changes in the Regulation on the scope of information to be provided in VAT returns and records, which came into force on 1 July 2021.

Effective from 1 January 2019, income tax legislation was amended to introduce revolutionary changes in the Polish WHT framework.

In response to Parliamentary Question No. 24182 regarding withholding tax, an Undersecretary of State in the Ministry of Finance said that the deferred regulations introducing the pay and refund mechanism will undergo substantial changes.

In their latest newsletter, our experts at WTS&Saja summarize the new mechanisms and preferences of the proposed law of 22 June 2021 amending the Personal Income Tax Act, the Corporate Tax Act and certain other laws.

Further VAT changes are expected to be introduced over the next months in 2021. The amending legislation has not been finalised yet, even though some of the changes would become effective as early as 1 July 2021. Below we briefly mention the most important of the proposed amendments.

Poland keeps up with its digital agenda and is about to implement e-invoicing via a national invoicing system.

On 16 March 2021, the CJEU upheld the European General Court’s judgments Commission vs. Poland and Commission vs. Hungary, which had ruled that the Polish tax on the retail sector and the Hungarian tax on advertisements did not infringe EU law on State aid.  

On 3 April 2020, the OECD issued the “Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 Crisis”, which addresses several tax concerns.

An overview on new transfer pricing regulations.

Tax exemption for young professionals and new rules, if tax still has to be paid.

We would like to summarise two important changes as of 2020. I.e. the implementation of new SAF-T and regulations regarding the white list of taxpayers.

A digital tax has been discussed in Poland, but never fully presented or implemented.

To avoid penalties, every taxable person who sells or purchases goods/services subject to mandatory split payment should be well prepared

The Central Register of Beneficial Owners will become operational as of 13 October 2019. 

Mandatory Disclosure Rules (MDR) for domestic VAT arrangements 

The current reverse charge mechanism in force for specific goods and services will be replaced