In January 2015 Poland introduced new regulations on Controlled Foreign Corporations (CFC), under which Polish tax residents are now subject to 19% tax on the income of their CFCs.
The CFC rules include legal persons, limited liability companies and non-tax transparent structures such as non-tax transparent partnerships.
The conditions of the CFC rules shall apply where any of the following conditions are fulfilled:
- The registered office (or place of management) of a foreign company is in a jurisdiction included on the Polish blacklist.
- The registered office (or place of management) of a foreign company is in a jurisdiction that has not concluded an agreement with Poland or the EU for the automatic exchange of information.
- The registered office (or place of management) of a foreign company is in any other jurisdiction and the following conditions are met:
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At least 50 percent of the company’s revenue is derived from passive income.
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At least one of the types of its passive income is taxed in another jurisdiction at a rate which is at least 25 percent lower than the Polish corporate income tax rate (19%), or is tax exempt (unless the exemption is according to the EU Parent/Subsidiary Directive).
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Whereas the Polish tax resident hold, directly or indirectly, at least 25 percent of its share capital, voting rights or rights to participate in its profits for an uninterrupted period of at least 30 days.
CFC provisions do not apply in the cases where:
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The foreign company’s income in the tax year is less than €250.000.
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The foreign company carries out our genuine business activities in an EU country (or an European Economic Area country), and is subject to tax on all of its income.
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The foreign company carries out genuine business activities outside the EU or EEA and is subject to tax on all its income provided that the income is not more than 10 percent of its revenue resulting from genuine business activities and Poland and the other country have an agreement on the automatic exchange of information in place.