Group Taxation in Poland
Tax capital groups are taxpayers of CIT. Tax capital group may be formed, for a period of at least 3 tax years, upon conclusion (in a form of a notary deed) of an agreement between 2 or more resident related companies (limited liability companies, joint-stock companies) and registration thereof with head of tax office appropriate for a representative company indicated in the agreement. Registration should be completed 3 months prior to beginning of a tax year selected for the group. The head of tax office of registration becomes competent in respect of group’s CIT. The representative company is obligated to calculate, collect and remit advance payments and tax of the group to the tax office.
Another conditions to be fulfilled by a tax capital group are following: average share capital of the companies must be equal to or higher than 1000000 PLN, one of the companies (parent company) must directly own at least 95 % shares in each of the other companies (subsidiaries), subsidiaries may not own shares in other companies in the group, companies may not be liable to any tax arrears in state taxes, companies may not be exempted from CIT on the basis of other statutes, companies may not be related (associated) with domestic nor foreign entities outside the group in a way triggering application of transfer pricing rules, net income of the group must be at least 3 % of its revenues.
Taxable amount for tax capital group is calculated as an excess of aggregated incomes of all companies in the group over their aggregated losses. If losses exceed the incomes in a tax year – a loss of a capital group is generated. Loss of a tax capital group may not be deducted from income of any of the companies after the group is terminated. Also losses incurred by member companies before formation of the group may not be set off against group’s income. Transfer pricing rules do not apply to intra-group transactions.
Taxation of dividends inside a tax capital group is not preferential. Generally, CIT on dividend payments made by resident companies to other companies is withheld at source at the rate of 19 %. Dividends will be exempted provided that the parent company owns at least 15 % of the dividend-paying subsidiary group member continuously for at least 2 years.
Malgorzata Sek
Foundation Centre of Tax Documentation and Studies in Lodz
