Tax news for financial institutions

The end of a calendar year (in Poland the calendar year commonly coincides with the fiscal year) and the beginning of a new one are always full of tax and compliance obligations. Here are some of the key tax-related deadlines that apply to Polish businesses in December 2020 and the first quarter of 2021 (click the image below to view it in fullscreen):

Below we present selected, key changes in the Polish tax environment coming into force as from January 1, 2021:

• limited partnerships (in Polish “spółka komandytowa”) become CIT payers on January 1, 2021 (tax opaque), and they are subject to CIT based on the same rules as, for example, limited companies. In exceptional circumstances, a limited partnership may decide to become a CIT payer on May 1, 2021 (so it will be tax transparent until April 30, 2021). Becoming a CIT payer by a limited partnership involves an obligation to close its accounting books;
• a general partnership (in Polish “spółka jawna”) may become a CIT payer (tax opaque) on January 1, 2021, if not all of its partners are individuals and not all of its partners are disclosed to tax authorities. Other general partnerships will still be tax transparent; 
• tax capital groups and CIT taxpayers that have exceeded the equivalent EUR 50m in revenues are obliged to prepare and publish information on the execution of their tax strategy for the tax year. The first information should concern 2020 and be published by December 31, 2021;
• real estate companies (i.e. companies in which 50% or more assets derive from real estate located in Poland) become tax remitters (tax remitter is an entity obliged to settle CIT) on the sale of shares in that real estate company. The amendment also imposes a number of other obligations on real estate companies, such as the obligation to appoint a tax representative in specific cases and the obligation to provide information on shareholders in real estate companies;
• limiting the possibility of utilizing tax losses by taxpayers that have taken over the assets of other entities constituting an enterprise or an organised part thereof as a result of a merger, in-kind contribution or purchase financed by a cash contribution. As a consequence, there will be no possibility to use the tax losses of an enterprise that is unable to settle them;
• taxation of the division of assets of a liquidated legal person. The amendment equates taxation of the handing over of the assets of the liquidated company with the sales transaction. As such, this regulation has been introduced in response to the current disputes between the tax authorities and taxpayers concerning the application of Article 14a of the CIT Act in the event of the division of property of a liquidated legal person;
• starting from 2021, Polish companies will be allowed to choose the so-called Estonian solution in Corporate Income Tax (CIT), i.e. CIT taxation of corporate profits will be postponed until the profits are distributed (i.e. no CIT will be due as long as companies’ earnings are reinvested). However, considering the criteria to be met in order to use that solution (for example, only companies with an annual turnover up to PLN 50m /ca. EUR 11m/, solely with shareholders being natural persons and with no shares in other companies are eligible), it will be unavailable to financial institutions;
• an obligation to prepare the local file for transfer pricing purposes will cover also transactions over PLN 500 000 (ca. EUR 112 000) concluded with unrelated parties whose beneficial owner is located in a tax haven. Taxpayers are obliged to exercise due care to determine that condition;
• ATAD 2 (hybrid mismatch arrangements) is implemented into the Polish law as from January 1, 2021. The amended provisions indicate cases in which, in principle, taxpayers will not be entitled to tax deductibility if their payment results in:
  • double deduction - consisting primarily in multiple recognition of costs on the same basis in different countries, without the corresponding indication of income in these countries,
  • deduction without tax (deduction / no inclusion) – consisting in the recognition of the benefit as tax costs without the corresponding recognition of that benefit in the income in the recipient country;
• Poland introduces so-called sugar tax, charged on non-alcoholic drinks containing added sugar, caffeine, or taurine;
• Poland introduces retail tax. Retailers will be required to pay tax on their monthly turnover from the sale of goods to consumers where turnover exceeds PLN 17m (approximately EUR 3.8m), at the rate of 0.8% on turnover between PLN 17m and 170m and at the rate of 1.4% for the portion of monthly turnover above that.