Retained Earnings

The Ministry of Finance has formulated a more unified approach to the question of retained earnings.

Essentially, where a limited liability company (Sp. z o.o.) passes a legally effective share-holders' resolution (i.e. such a possibility is clearly entered in the Company's Articles of Association), it is possible for the Company to retain its profits rather than paying them out to the shareholders as dividends.

In the Ministry's opinion, the tax consequences of this are as follows:

i) no corporate tax liability;

ii) no withholding tax on the value of retained dividends for the shareholders.

It must be understood that this applies only where there is a clear provision for this in the Company's Notarial Deed.