August 29, 2019
Poland issues draft bill to implement EU ATAD 2 anti-hybrid measures
Poland’s Ministry of Finance published, on 23 August 2019, a draft bill setting forth several provisions to implement certain anti-hybrid measures (as an implementation of the European Union (EU) Anti-Tax Avoidance directive ATAD 2).1
Generally, hybrid mismatches may occur when jurisdictions have different regulations in the tax qualification of sources of income or types of entities, which results in double deduction of payments as tax deductible costs or in deduction of costs without inclusion as taxable revenues on the other side of the transaction. The following hybrid mismatch arrangements are addressed by ATAD 2:
The key purpose of implementing the ATAD 2 into the Polish legal order is to counteract the situation of double tax deductions or the tax deduction of costs without recognition of corresponding revenues. To achieve this goal, some topics have been defined differently than envisaged by ATAD 2.
The Polish Ministry of Finance opened a consultation on the draft bill and comments are due 2 September 2019. The provisions may also be subject to further amendments during the legislative process.
If approved, the effective date of the new provisions will be 1 January 2020.
1. Council Directive (EU) 2017/952 of 29 May 2017 amending Directive (EU) 2016/1164 as regards discrepancies in the qualifications of hybrid structures regarding third countries. The draft bill also proposes measures implement automatic exchange of information on reportable cross-border arrangements (DAC6), but a separate Alert will be issued on this matter.
For additional information with respect to this Alert, please contact the following:
EY Doradztwo Podatkowe Krupa sp. k., Warsaw
EY Doradztwo Podatkowe Krupa sp. k., Wroclaw
Ernst & Young LLP (United States), Polish Tax Desk, New York
Ernst & Young LLP (United Kingdom), Polish Tax Desk, London