Income taxes in Poland: Selected amendments

BSJP Brockhuis Jurczak Prusak Sroka Nilsson Sp. k. | View firm profile

On 30 November 2020, a law introducing i.a. taxation of limited partnerships was published in the Journal of Laws. The regulations amended by this law will enter into force on 1 January 2021.

The most important amendments include the following:
  1. A limited partnership will become a CIT taxpayer, which means that partners of these companies will pay income tax on the income.  The limited partnership will be able to decide that it becomes an income taxpayer on 1 May 2021 instead of 1 January 2021;
  2. However, under certain conditions, limited partners are exempt from tax on 50% of their income generated within a limited partnership, but not more than PLN 60 000 in a tax year.  Whereas, general partners will be entitled to a deduction from their tax on the amount of tax paid by the limited partnership. This deduction will be proportional to the contribution of the general partner to the profit of the limited partnership;
  3. General partnerships having their registered office or management board on the territory of the Republic of Poland, if their partners are not only natural persons, and the general partnership does not submit, before the beginning of the financial year, information on PIT taxpayers who have, directly or via non-taxable persons, rights to participate in profits of that partnership or update the information within 14 days from the date of occurrence of the change, they will also become CIT taxpayers;
  4. Increase from EUR 1.2 million to EUR 2 million of the upper limit of incomes from the current tax year entitling them to benefit from 9% CIT;
  5. Limitations on abolition tax relief in PIT;
  6. Limitation on the possibility to settle tax losses by taxpayers who took over the assets of other entities or acquired an enterprise or an organised part of an enterprise, including by way of a contribution in kind, or who received a cash contribution for which they acquired an enterprise or an organised part of an enterprise, as a result of which the subject of the taxpayer’s business activity will change, or if, as a result of, i.a. the above acquisition, at least 25% of shares (stocks) of the taxpayer are held by an entity or entities which did not have such rights as at the end of the tax year in which the taxpayer incurred such loss.
  7. Division of assets of a liquidated legal person will be subject to taxation;
  8. If a party disposing the shares is an entity not having its registered office or management board on the territory of the Republic of Poland, or a natural person not having its registered office or management board on the territory of the Republic of Poland, and the subject of the disposal transaction are, i.a. shares (stocks) granting at least 5% of the voting rights in the company. A real estate company, as a payer, will be obliged to pay 19% income tax on the disposal of shares (stocks) within 20 days of the month following the month in which the income was generated;
  9. Starting from 1 January 2021, introduction of the so-called Estonian CIT, the main assumption of which is that the tax can only be paid when profits are distributed to its shareholders;
  10. Tax capital groups and taxpayers whose income exceeded EUR 50 million in a tax year will be required to prepare their tax strategy for the tax year and make that information publicly available.

 

More from BSJP Brockhuis Jurczak Prusak Sroka Nilsson Sp. k.