Poland: Types of Company
There are no Controlled Foreign Company rules in place in Poland, and no special tax regime in place relating to holding companies.
Tax consolidation is permitted under Article 1A of the 1992 Corporate Income Tax Law (subject to restrictions on the type of companies wanting to consolidate for tax purposes, the share capital of the companies, the relationship between the group, and the absence of tax debts). Cross-border consolidation, however, is not available.
For a country to be an attractive location in which to set up a holding company 4 criteria must be satisfied:
- Incoming Dividends: Incoming dividends remitted by the subsidiary to the holding company must either be exempted from or subject to low withholding tax rates in the subsidiary's jurisdiction.
- Dividend Income Received: Dividend income received by the holding company from the subsidiary must either be exempted from or subject to low corporate income tax rates in the holding company's jurisdiction.
- Capital Gains Tax on Sale of Shares: Profits realized by the holding company on the sale of shares in the subsidiary must either be exempt from or subject to a low rate of capital gains tax in the holding company's jurisdiction.
- Outgoing Dividends: Outgoing dividends paid by the holding company to the ultimate parent corporation must either be exempt from or subject to low withholding tax rates in the holding company's jurisdiction.
Dividends are generally subject to a 19% rate, which can be reduced under a DTA (of which Poland has more than 80), and is removed altogether when paid to companies in EU and EEA states, subject to the conditions of the Parent-Subsidiary Directive.
Poland additionally benefits from a transitional period for removing the withholding tax on interest and royalty payments paid by Polish corporate residents to associated EU companies. From 1 July 2009, it was 5% (previously 10%). From 1 July 2013, the full exemption was put in place.