Poland - Proposed rules for tax treatment of CFCs 

June 3: Legislation that would amend both the corporate income tax and individual (personal) income tax laws in Poland and that proposes rules on the taxation of controlled foreign corporations (CFCs) had its first reading in the Sejm in May 2014.

The legislation would establish the requirements as to what constitutes a CFC—including rules for determining:

  • The level of control (i.e., the taxpayer continuously holds, during a period of at least 30 days, 25% or more of shares in the capital; 25% or more of the voting rights in the supervisory bodies or regulatory bodies; or 25% or more share of profits of a foreign corporation)
  • The nature of income (i.e., at least 50% of the foreign corporation’s income consists of “passive income” such as dividends, shares, liabilities, copyrights)
  • The location of a company in a country having a lower tax rate (i.e., at least one type of the foreign company’s passive income is subject to a tax rate that is at least 25% lower than the current corporate income tax or individual income tax rate in Poland or is subject to a tax exemption or tax exclusion)

The CFC, under the proposals, also could be defined as a foreign subsidiary company that has its headquarters or management board in a territory or country that is identified as a “harmful tax competition” jurisdiction or in a territory or country that has not concluded an income tax treaty and/or exchange of tax information agreement with Poland.

Read a June 2014 report [PDF 121 KB] prepared by the KPMG member firm in Poland: Proposed changes in the corporate and personal income tax acts concerning related parties – proposed regulations regarding the taxation of controlled foreign corporations (CFC)

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