Taxes

Tax system

Principal taxes

The main taxes in Poland are:

  • Corporate income tax
  • Personal income tax
  • Tax on civil law transactions
  • VAT
  • Stamp duty
  • Real estate tax
  • Excise duties.

There is no excess profits tax or alternative minimum tax.

In general, foreign companies and individuals pay the same taxes as Polish legal entities and individuals (except where a tax treaty provides otherwise).

Basic legislation

All taxes in Poland are imposed by the government in Taxation Acts, which set the rules for imposing taxes, their rates and duties, as well as taxpayer responsibilities. The Minister of Finance may be authorized by an Act to decree regulations. All legislation is published in official publications (i.e. the Journal of Laws and the Official Journal of the Republic of Poland).

The Tax Ordinance is the most general tax legislation which defines:

  • General taxation rules;
  • Tax liabilities of third parties;
  • Tax information;
  • Tax proceedings;
  • Structure of the tax administration; and
  • Fiscal confidentiality.

Other relevant legislation includes the Corporate Income Tax Act, Personal Income Tax Act, Value Added Tax Act, Civil Law Activities Tax Act (for capital duties and transfer tax), Local Taxes Act (i.a. real estate tax).

Parliament passes tax legislation with a simple majority of votes.

Administration

Tax authorities

Taxes in Poland are administered by:

  • Tax Offices: Units supervising the collection of taxes in their territories. They also issue individual administrative decisions in tax cases.
  • Fiscal audit offices: Offices that carry out tax and procedural audits of fiscal accounting;
  • Tax Chambers: Supervise the tax offices and are empowered to review administrative decisions of tax offices and fiscal audit offices;
  • Minister of Finance: Responsible for Polish budgetary policy and supervision of the entire taxation system.

Taxpayers may appeal to the Tax Chamber against the decisions of the local Tax Office or Fiscal Audit Office. An appeal against a decision of the Tax Chamber may be directed to the Regional Administrative Court. Taxpayers are also entitled to resort to the Supreme Administrative Court to review decisions of the Regional Administrative Courts.

Rulings

Two types of tax rulings are available in Poland: general rulings and individual rulings. A general ruling aims to make the application of the tax law by the tax authorities uniform; general rulings may be applied by all taxpayers. Individual rulings, which may only be relied on by the taxpayer obtaining the ruling, are issued upon written application. To obtain a ruling, the taxpayer must submit a written request that sets out the actual facts or planned events, the question and give its own opinion on the issue. An ruling request may be denied where it relates to a purely hypothetical situation, it falls outside the area of tax law, the party lacks standing or a tax proceeding or examination of the issue has already commenced. The Tax ruling is binding for the tax authorities but not the taxpayer. In other words, tax authorities can not challenge tax settlements of a taxpayer following the letter of the ruling, however, if the taxpayer disagrees with a ruling the tax settlements may still be done in a different manner than prescribed with the ruling and are subject to standard control/verification by tax authorities as if the ruling never was issued. The ruling remains valid until changed by tax authorities (possible only in specific situation; change comes into effect starting from the next settlement period, e.g. next year for CIT) or when the underlying provision of law is a changed in a manner making the ruling irrelevant.

Advance pricing agreements  

Poland has had an advance pricing agreement (APAs) regime in place since 2006, which allows taxpayers to verify the correctness of the pricing methodology applied in domestic and foreign related party transactions and ascertain the up front acceptance of the transfer pricing methodology by the tax administration. Unilateral, bilateral and multilateral agreements are possible.

Before submitting an application for an APA, the taxpayer may request Ministry of Finance to address whether an APA would be useful, the scope of information to be submitted, the procedure and probable date of conclusion of an APA. The application must be submitted by the Polish entity and the application fee (which depends on the value of the transaction) paid within seven days of the date the application is submitted. An APA is valide for three years and may be extended for an additional three years.

A taxpayer requesting an APA is required to justify the selected transfer pricing method, prepare a description and explain the application of the selected method, indicate the circumstances that could affect the correctness of the pricing methodology, prepare documentation used as a basis for setting the level of transactional prices, and propose tax years to be covered by the APA

Double taxation relief

Unilateral relief

Foreign tax paid on foreign-source income may be credited against Polish tax on the same profits, but the credit is limited to the amount of Polish tax payable on the foreign income.

Credit for underlying tax related to dividends received by a Polish resident

from an entity resident in a non-EU member state and with which Poland has concluded a tax treaty may be granted, provided the Polish company holds at least 75% of the payer for at least two years before the distribution of the dividends.

Tax treaties

Poland has a broad tax treaty network, with many treaties reducing the withholding tax rates that apply to dividend, interest and royalty payments by Polish companies to nonresidents. If the EC Parent-Subsidiary Directive applies, no tax is withheld on dividends payments. Under transition rules in the EC Interest and Royalties Directive, Poland is permitted to impose a 5% rate on interest and royalties until 1 July 2013. The full exemption will apply after that date.

Poland’s Tax Treaty Network

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This material has been prepared by professionals in the member firms of Deloitte Touche Tohmatsu Limited. It is intended as a general guide only, and its application to specific situations will depend on the particular circumstances involved. Accordingly, we recommend that readers seek appropriate professional advice regarding any particular problems that they encounter. This information should not be relied upon as a substitute for such advice. While all reasonable attempts have been made to ensure that the information contained herein is accurate, Deloitte Touche Tohmatsu accepts no responsibility for any errors or omissions it may contain whether caused by negligence or otherwise, or for any losses, however caused, sustained by any person that relies upon it.

 

Last updated, October 2015

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