project | In Principle

The new regime is intended to incentivise holding companies to locate in Poland and create a competitive tax environment encouraging Polish businesses to return from foreign jurisdictions. These themes resound from the explanatory memorandum to the bill introducing the “Polish Deal.” But do the proposed provisions actually reflect these ideals? Will the new regime be attractive to any group of taxpayers?

The bill to implement the “Polish Deal” programme would introduce the separate institution of a VAT group, previously unknown in the Polish tax system, enabling consolidation of the tax result within a capital group.

The bill to amend the Personal Income Tax Act, the Corporate Income Tax Act and other acts published on 26 July 2021, known as the “Polish Deal,” includes new rules for tax depreciation of real estate held by real estate companies. The proposed changes could significantly limit the value of tax costs from depreciation.

Work on the amendment of the Investment Funds Act is coming to an end. The changes include extending the range of fees in connection with distribution of participation units in Poland and introducing uniform rules for advertising information provided by funds and detailed rules for protection of investors in the event of cessation of marketing of participation units in foreign funds in Poland.

The Ministry of Finance has proposed regulations allowing for conclusion of an investment agreement (also called a “590 interpretation”) between an investor and a tax authority—an agreement on the tax consequences of a planned or commenced new investment in Poland. It is supposed to constitute a binding opinion for the tax authorities on all tax consequences of the planned investment. Thus the investment agreement should be an effective tool for removing investment barriers in Poland and thus encouraging more investments, including foreign investments. In particular, it will be addressed to foreign entities planning to commence business in Poland, but current taxpayers in Poland will also be able to take advantage of it.

The long-awaited rules for construction of wind farms have been announced. On 4 May 2021, a bill to amend the Act on Wind Power Plant Projects (aka the “Distance Act” or “10H Act”) was published on the Government Legislation Centre website. Its adoption may once again stimulate the growth of wind power, which not long ago was the most dynamic branch of renewable energy sources in Poland.

Work is underway on a bill called the Act on Protection of the Rights of Acquirers of Residential Units or Single-Family Houses and the Developers Guarantee Fund (print 985). The bill was approved by the Sejm, the Senate adopted amendments, and the bill will now be reconsidered by the Sejm. Entry into force of the new act will impose additional new duties on developers. The aim is to better protect homebuyers against the loss of funds invested in residential developments, particularly when the developer becomes insolvent before the project is completed. Is the new instrument likely to fulfil its intended function?

Nearly two months ago the Ministry of Climate and Environment published a proposal to implement the Single-Use Plastics Directive ((EU) 2019/904) into Polish law. The amendment is supposed to enter into force no later than 3 July 2021, but it is raising many doubts.

On 23 October 2020 the European Parliament voted on amendments to the CMO Regulation (1308/2013). Ultimately the lawmakers decided not to ban the use of names alluding to meat in relation to plant substitutes. It will still be possible to buy vegetarian sausage in stores and order veggie burgers in restaurants. But makers of ersatz dairy products may face a tougher time.

On 30 September 2020, an extensive set of proposed amendments to tax laws was submitted to the Polish Parliament. We have already written about how general partnerships and limited partnerships are to be taxed. In this article, we describe the planned form of taxation of income from the sale of real estate companies and related doubts.

The guidelines for imposing corporate income tax on limited partnerships and some registered partnerships have now been stated with more specificity. On 16 September 2020 a draft Act Amending the Personal Income Tax Act, the Corporate Income Tax Act, the Act on Flat-Rate Taxation of Certain Income of Natural Persons, and Certain Other Acts (draft no. UD126) was published on the website of Poland’s Government Legislation Centre. The draft and the extensive justification for the proposal provide details of the rules for taxation of limited partnerships from 2021 forward. It should be borne in mind that these rules may change during the course of the legislative process.

The Ministry of Finance intends to impose corporate income tax on limited partnerships, and on registered partnerships whose shareholders (taxpayers participating in their profits) are not disclosed. These types of partnerships will probably become CIT payers starting from 2021.