Tax on transferred income.  Data for 2022. Comments: Malgorzata Samborska

Fourteen taxpayers paid the transferred income tax, which has been in effect since the beginning of 2022. A total of PLN 9.4 million was transferred to the Tax Office’s account, which constitutes 0.013 percent of budget revenues. And how much money everyone made in the process, Malgorzata Samborska, tax consultant and partner at Grant Thornton Polska, wrote on social media.

The purpose of the tax on remitted income was to regulate the transfer of profits made by Polish companies to their foreign subsidiaries. This is a new tax introduced by Polish decree, effective from 1 January 2022. It applies to taxpayers in the field of ICT, i.e. mainly capital companies. For the first time, companies have settled this tax in their 2022 CIT-8 return.

Tax on transferred income

“But how much money has everyone made during this…” Małgorzata Samborska, tax consultant and partner at Grant Thornton Polska, wrote on the website.

Grant Thorthon Polska, the consulting company that prepared the report on the subject, explained on social media that “provisions on tax on remitted income are effective from January 1, 2022. As a general rule, Polish entities pay receivables from selected property titles to and are subject to Associated with its registered offices in countries with low tax levels.

What does it consist of? Taxable income may primarily include costs related to: intangible services (including consulting, advertising, administrative services, guarantees and guarantees), license fees (including end-user licenses), and debt financing costs (interest) , transferring the risks of the debtor’s insolvency, functions, assets and risks,” she added in a post on the X platform.

It has been emphasized that “it is relatively easy to fall into the obligation of checking with due diligence whether tax on remitted income will not be charged.”

“The new tax has raised many doubts since its inception, primarily due to the unclear terms and conditions that are difficult to verify. A Polish taxpayer who includes specific costs of a foreign entity is covered by the provisions of the tax on remitted income as tax-free” The costs must prove that they are You do not meet the conditions for being subject to tax on the transferred income. In practice, this means a presumption of taxability that the taxpayer must rebut. Our experience shows that taxpayer verification procedures are very challenging,” wrote Grant Thornton.

Taxpayer obligations

The fact that the Ministry of Finance published a 46-page draft of clarifications for the tax on remitted income in July proves how difficult and unclear the regulations are. – noted Malgorzata Samborska.

– Taxpayers who paid PLN 165 (the lowest tax amount in this regard in 2022) certainly had to devote long hours to the appropriate calculations and arrangements. The question is, is this skin worth the diaper? Considering the financial impact, is it profitable for Polish businessmen to maintain such an obligation? Let us remember that from 2023, the legislator explicitly stipulates that the burden of proving that at least one of the tax-related conditions is not met falls on the Polish company. Therefore, it will be more difficult to avoid this unnecessary additional commitment, she added.

Malgorzata Samborska explained that the obligation to calculate the tax is activated “by exceeding the costs of intangible services and benefits from related entities at a level exceeding 3 percent (which is facilitated by the high costs of obtaining financing).”

– Even if it turns out in the end that there is no additional tax payable (as statistics from the Ministry of Finance show), taxpayers will have to make a number of additional arrangements, calculations and analyzes and obtain declarations from abroad and indicated that the entities are part of the obligation to exercise due diligence.

Read also: Billions of zlotys for the IRS. These are the largest taxpayers in Poland

Main image source: Piotr Nowak/Pub

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