June 15, 2021
Poland announces plans to propose broad incentives for investors
On 14 June, the Polish Government announced that it plans to introduce a set of broad changes to the tax laws. Certain changes are aimed at attracting new investors and supporting the economy in a post-COVID-19 environment.
The proposed amendments relate to areas which have been expected by investors and would have a positive impact on the attractiveness and predictability of long-term investments in Poland. The draft law has not been published yet and detailed assessment should be made after the proposed regulations are announced to the public.
These changes are outlined below.
Among other changes the discussed proposals include:
- Introduction of new incentives as well as the enhancement of existing incentives related to: research and development (R&D) activities, Intellectual Property-generated revenue, employment of R&D experts, use of robots and investments in prototypes, initial public offerings and foreign expansion of businesses
- Voluntary taxation of financial services with Value Added Tax (VAT) in business-to-business transactions (currently the obligatory VAT exemption of financial services leads to non-deducibility of VAT by financial institutions on acquired goods and services)
- Withholding tax exemption on 95% of dividends paid after a one-year holding period (regardless of whether the recipient is a resident of a European Union (EU) or non-EU state)
- Participation exemption for capital gains realized on the sale of shares
- Simplified requirements for corporate income tax consolidation (no minimum profitability, lower share capital threshold, possibility to carry forward tax losses, allowed shareholding relations between tax group members other than between a dominant entity and a member)
- Introduction of VAT grouping
Additionally, among the prospective incentives, the Government also proposes:
- Special “premium investor” status for the largest, strategic investors in Poland, associated with support in addressing tax matters through an “Investor Desk” at the tax authorities.
- A new form of a formal assurance of the tax consequences of an investment which, according to this initial information, should allow investors to achieve various forms of clearance from the tax authorities for a five-year period in a simpler and faster manner.
The above changes are expected to increase the attractiveness of Poland for investors.. However, since the information released to date is only a high-level description of the proposed changes, further assessment should follow after draft regulations are issued which is expected later this year.
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