The president is the formal head of state. The government structure is based around the Council of Ministers led by the prime minister. The legislative authority is held by the lower house (Sejm) and the upper house (Senat). Poland is a member of the EU and its national law must abide by the conditions of its regulations. The Constitution is the supreme law in Poland and the Polish legal system is based on the principle of civil rights governed by the Civil Code. Please note that due to special measures adopted in connection with the COVID-19 pandemic some of the deadlines indicated in this part of the Guide are postponed or might be postponed by the Polish government. Entities or persons that control CFCs must maintain a register of their CFCs, keep records of economic events involving the CFCs, submit a CFC tax return and pay a tax in Poland on the CFCs’ income. The CFC regime also includes foreign capital groups (including member companies) and organizationally or legally separated parts of foreign companies or other entities. The CFC regime does not apply to entities subject to taxation in an EU or European Economic Area (EEA) member state on their worldwide income if such companies carry out actual (genuine) economic activity in this member state.įrom 2019, the CFC regime covers entities such as foreign foundations, trusts or other entities (titles) of a fiduciary nature. That paid a total amount of income tax that is lower than the difference between (i) the income tax that would be paid had the entity been resident in Poland and (ii) the income tax actually paid.Where at least 33% of the entity’s revenues generated in a given tax year are derived from passive sources of income and.Directly or indirectly controlled by a Polish CIT/PIT taxpayer (the definition of “control” is very broad and covers, among other criteria, holding more than 50% of the shares or more than 50% of the voting rights in controlling bodies or decision-making bodies, or holding more than 50% of the shares with the right to participate in the company’s profits, but also exercising a “factual control”).A foreign entity resident in (i) a tax haven or (ii) a state included in the EU list of non-cooperative tax jurisdictions.A foreign entity resident in a state with which Poland or the EU has not ratified a treaty on the exchange of tax information.A CFC is defined as one of the following: Polish legal entities and natural persons are liable for CIT and personal income tax (PIT) on the profits earned by their controlled foreign companies (CFC), even if the income is not distributed by the CFC. The non-resident company is usually taxed on income determined on the basis of the accounting records of the branch. The rules regarding taxable income, tax-deductible costs, depreciation and other factors applicable to a non-resident company having a branch in Poland are the same as those applying to Polish companies. Generally, the foreign company pays tax on income resulting from the branch’s activities and allocated to the branch. Foreign partnerships are also subject to corporate tax in Poland if they are treated as non-tax transparent legal persons in their home country.Ī branch of a non-resident company does not constitute a separate entity or a taxpayer for income tax purposes in Poland. If a company does not have its registered office or place of management in Poland, the tax in Poland is levied only on the income and capital gains actually earned in Poland (limited tax obligation). As a rule, companies that have their registered office or place of management in Poland are liable for Polish corporate income tax on their worldwide income and capital gains (unlimited tax obligation). The corporate income tax (CIT) law provides both for an unlimited and limited tax obligation. There are no provincial or local income taxes in Poland. Non-residents who carry on business in Poland, are employed in Poland, or sell certain types of properties are also subject to Polish income tax. Poland imposes corporate and personal income tax on its residents, including Polish subsidiaries of foreign entities in respect of income and capital gains earned anywhere in the world.
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