The Ministry of Finance has announced that starting from 2022 active support for foreign investment will be Poland's hallmark in the international arena. New tools, such as Investor Desk and Interpretation 590, are to be helpful in this process. There will also be profitable tax solutions.

Compared to other countries in the region, Poland seems to be a large and attractive market. However, it often loses in battles for the location of strategic investments to its neighbours. The reasons for this state of affairs is usually the lack of appropriate incentives and systemic solutions supporting large businesses.

However, the tax administration has announced substantial changes. The key role is to be played by more attractive tax conditions and fast and comprehensive services for foreign businesses. As a rule, large investments are preceded by an in-depth analysis of the legal and tax consequences of a given undertaking. The Minister of Finance admits that currently obtaining such information is a toilful process. Therefore, he proposes to establish an Investor Desk, which would take care of the largest companies - both Polish and foreign ones.

Following the example of Italy, Hungary and Slovakia, corporations interested in investing in Poland will be able to count on special solutions. The most significant of these will be Interpretation 590, i.e. an investment agreement concluded directly with the Ministry of Finance. It will be a kind of ‘super-interpretation’. In one document, the tax implications of a project will be specified in terms of all taxes and levies. Currently, gathering such information takes many months, and in case of a dispute with an authority, even a few years.

Interpretation 590 is to combine features of individual ruling, binding rate information, binding information on excise duty, a protective opinion and a prior agreement on price. The Ministry of Finance announces that it will take the form of an agreement concluded with an investor, which will be valid for 5 years from the date of its conclusion, with the possibility of renegotiation and extension of its validity.

Another incentive is to be provided by the establishment of VAT groups, modelled on tax capital groups. Thus, Poland is to join the group of 18 Member States that have successfully implemented such a solution in their legal systems. However, the main difference from tax capital groups in CIT is the lack of a minimum share capital threshold. The criterion of participation in the capital is also to be reduced and will amount to 50% instead of 75% as in the case of CIT groups.

Tax capital groups are also to gain. It is being planned to reduce the average amount of share capital from PLN 500 000 to PLN 250 000. It is also going to be possible to merge, transform and divide companies making up a tax capital group (PGK). Finally, the profitability criterion, failure to meet which results in the group losing the status of taxpayer, is to be abolished.

Investors from non-EU countries, on the other hand, are to be attracted by the institution of the Polish Holding Company, which will allow profitable taxation of dividends. Current regulations allow a full tax exemption on dividends, but only if the recipient of the dividend is a company with its registered office in Poland or another European Union or European Economic Area state. The new regulations will allow a 95% tax exemption on other dividends.

A Polish Holding Company may also benefit in the case of share-deal transactions. Disposal of shares in subsidiaries is to benefit from a full exemption from CIT. The purpose of this solution is to increase the companies’ freedom in shaping their investment portfolios. Currently, such profits are taxed at a 19% rate. The exemption may enable reinvestment  of the same amount of money in another undertaking. 

The Ministry of Finance has also announced to prepare incentives for financial institutions, which during the Brexit and COVID-19 era are considering moving their European headquarters to the eastern parts of the EU. Provision has been made for them to opt for VAT taxation of their activities to enable them to deduct input tax on goods and services purchased in Poland.

The announced changes should be assessed positively. However, a more detailed assessment will only be possible after the publication of the specific draft laws. It remains to be hoped that the instruments, which can undeniably contribute to an increase in the value of foreign investments in Poland, will not be subject to overly rigorous conditions, which in practice could unfavourably affect their profitability.

Wojciech Jasiński, Tax Consultant, ATA Tax Sp. z o.o.

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