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2018 expected changes to Polish income taxes

In July 2017, Polish authorities published a draft  of revolutionary amendments to Polish income taxes, which are expected to come into force from 1st January 2018 once officially issued. The key novelties are:

1)     Limitation of  tax deductibility of interest on debt financing (incl. both related and unrelated parties) to 30% of EBITDA once they exceed a certain level per year. Current thin capitalization regulations will be derogated after one year.

2)     Limitation of  tax deductibility  of cost of intangible services (incl. eg. accounting and assets to 5% of EBITDA once they exceed a certain level per year . Whether the limit will apply to both related and unrelated purchases is still under discussion

3)     Separate taxation of capital gains and operating profits  for CIT taxpayers which will mean that cost of/loss on financial/equity operations will not be deductible against operating profits any longer.

4)     0,5% minimum CIT on the initial book vale of  some commercial real properties (retail and service buildings like for example: shopping  malls,  office buildings).

5)     Interest on profit participating loans will be taxed as  dividends for the lender and will be  non tax deductible  for the borrower.

6)     Extension of the real estate clause (gain  on disposal of shares in real estate companies to be taxed in Poland) to  redemption of shares, liquidation of company,  stepping out from a partnership, reduction of capital in a partnership. 

7)     Dividend like participation exemption will not apply to redemption of shares an liquidation any longer.

8)     Income from closed end investment funds without redemption of certificates will be taxed as dividends (19% wht in Poland unless an applicable tax treaty does not provide otherwise).

9)     Income from incentive programs based on derivatives, not resulting in acquisition of shares, will be taxed at progressive personal income tax rates  (up to 32%) instead of 19% rate applicable to capital gains.

10)  Special flat rate tax - 8,5% (of income) of personal tax which optionally may apply to rent of real estate will not be available to individuals with annual rent income higher than 25 000 Euro.

Since 12th August  2017, one can make one off tax depreciation of payments for some categories of new fixed assets up to 25 000 Euro per year instead of depreciation over the statutory assets life time.  


Monika M. Dziedzic


Tel. +48 22 322 68 88



Source: International Tax Review

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