As part of the package of solutions aimed at reviving the economy after the epidemic (the so-called Polish Deal), another draft of regulations aimed at increasing the attractiveness of Poland for foreign investors was published on 23 June, 2021.

Investors should pay particular attention to, inter alia, the exemption of Polish holding companies from the tax on dividends and capital gains tax, as well as a new tax risk management instrument in the form of an investment deal and another new tax incentive in the form of tax relief for increasing revenues from the sale of products. The basic principles of these new tax solutions are briefly discussed below:

Special rules of taxation of Polish holding companies

• introducing the definition of a holding company,
  • which can only be a limited liability company or a joint stock company with Polish tax residence, as well as
• introducing a definition of a subsidiary, understood as a company:
  • in which the above holding company holds at least 10% of shares (stocks) continuously for at least one year,
  • which does not own more than 5% of shares (stocks) in the capital of another company,
  • which is not a partner in a company that is not a legal person,
  • which is not a company forming a tax capital group,
  • who do not benefit from tax exemptions within Special Economic Zones / Polish Investment Zone,
  • operating in the form of a limited liability company or joint stock company with Polish tax residence (domestic subsidiary) or in the form of a company with legal personality and tax residence in another country, with the exception of tax havens and similar tax jurisdictions (foreign subsidiary),

• tax exemption (under certain conditions) of 95% of dividends obtained by a holding company from a domestic subsidiary or foreign subsidiary,
• exemption from tax of capital gains achieved by a holding company from the sale of shares (stocks) in domestic or foreign subsidiaries (except for real estate companies) to an unrelated entity (provided that the holding company submits to the competent tax authority a declaration of its intention to use this exemption, at least 30 days before the date of sale).

Investment deal

• introducing the possibility for an entrepreneur (both foreign and Polish) to conclude a deal with the Polish tax authorities on the tax consequences of a new investment planned or started in Poland, worth at least PLN 100 million (from 2025 - PLN 50 million), including elements of tax ruling, GAAR opinion, APA, WIA and WIS, where:
  • the concept of "new investment" will be understood, in accordance with the provisions of the Polish Investment Zone regulations, as an investment in assets related to the establishment of a new plant, increasing the production capacity of an existing plant, diversification of the plant's production by introducing products not previously produced in the plant or a fundamental change in the existing production process and, under certain conditions, the acquisition of assets belonging to an establishment that is closed or would otherwise have been closed,
  • the scope of the investment deal may cover one, several or all of the following issues enumerated in the draft regulations:
    • assessment of transfer prices in controlled transactions undertaken by the investor (in accordance with the principles of issuing unilateral advance pricing agreements - APA),
    • application of the GAAR (anti-tax avoidance) clause to the issues indicated by the investor in the application (in accordance with the principles of issuing GAAR opinions),
    • classification and type of goods for excise duty purposes (in accordance with the rules for issuing binding excise duty information - WIA),
    • description and classification of goods or services for VAT purposes and the appropriate VAT rate (in accordance with the rules for issuing binding VAT rate information - WIS),
    • in other matters - interpretation of tax law (including in the field of local taxes), where, as emphasized in the draft regulations, it will be similar to ordinary individual tax rulings well known to investors for a long time, but it will also be able to go beyond the scope and rigors related to such interpretations,
  • due to the contractual nature of the investment deal, the tax authorities will have the right, but not the obligation, to conclude it (unlike tax rulings, APA, WIA and WIS, which are obligatory if all formal conditions are met),
  • an investment deal will be concluded with the Minister of Finance, Funds and Regional Policy or a body authorized by him for a specified period not exceeding five tax years, which will bind the tax authorities as well as the investor himself,
  • tax authorities will be able to terminate investment deals with retroactive effect in the event of disclosure of previously unknown circumstances relevant to the given deal (unless the deal is properly adjusted to these circumstances) or in the event of failure to apply the deal by the investor; the authorities will also be able to terminate the deal (with effect from the moment of termination) if it is found to be incorrect in the light of court case law, and it will expire by sole operation of law if it becomes contrary to the underlying legal provisions as a result of their amendment,
  • the investor himself will also be able to terminate the investment deal at any time - in this case, the deal will cease to apply from the first day of the next tax year,
  • the deal will be concluded upon an application submitted (also in English) by the investor or group of investors,
  • the submission of the application itself will be subject to an initial fee of PLN 50,000 per each investor (refundable in the event of a refusal to conclude a deal by the authorities), and in the event of concluding a deal, it will also be necessary to pay an individually negotiated main fee, in the amount of PLN 100,000 to 500,000 (per all investors covered by the deal),
  • it will also be possible to amend the investment deal (provided that the next initial and main fee is paid, the amount / limit of which will be half of that applicable to the original application for the conclusion of the deal), as well as allow a new investor to join the deal (subject to an additional fee)
  • as opposed to ordinary tax rulings, disputes relating to conclusion of the investment deal could not be brought to administrative courts.

New tax relief to increase revenues from the sale of products

• introduction of a new tax relief for all entrepreneurs (including large ones) allowing to deduct 100% of eligible (specified exhaustively in regulations) tax deductible costs incurred in order to increase revenues from the sale of products, but not more than up to the amount of income from the activity economic and not more than PLN 1 million in the tax year, where:
  • the condition for the deduction is, in the period of two subsequent tax years:
    • increase by the taxpayer of revenues from the sale of products in relation to the revenues on this account established on the last day of the tax year preceding the year in which the costs were incurred or
    • achieving revenues from the sale of products not previously offered or
    • achieving revenues from the sale of products not previously offered in a given country,
  • both sales revenues on the Polish and foreign markets, but only to unrelated entities, will be taken into account,
  • eligible incurred costs will include the following costs of:
    • participation in fairs, incurred for the organization of the exhibition space and the purchase of air tickets, accommodation and meals for employees,
    • promotional and information activities, including the purchase of advertising space, website preparation, press publications, brochures, information catalogs and leaflets,
    • adapting product packaging to the requirements of contractors,
    • preparation of documentation enabling the sale of products, in particular regarding the certification of goods and registration of trademarks,
    • preparation of documentation necessary to enter the tender, as well as to submit offers to other entities,
  • in the case of special economic zone investors, the application of this relief will only apply to costs not included in the calculation of income covered by the zone exemption,
  • the amount of eligible costs not used in a given tax year (due to a loss or insufficient income) can be settled in the next five tax years.