Poland proposes overhauling foreign fund tax exemption to align with EU law

The recently published amendment to the CIT act constitutes an answer to the taxpayers’ doubts concerning rules on the tax exemption for foreign investment funds. The need for new legislation stemmed from two key Court of Justice of the European Union judgments, which found Polish regulations to be discriminatory. Principles which had to be fought for in courts are now to be codified in the legislation, promising a more stable and predictable environment for cross-border investments.  

For many years funds domiciled in third countries (outside of the EU / EEA) were excluded from the CIT exemption. Despite a clear CJEU judgment issued in 2014, which stated that such legal provisions are discriminatory, the Polish law offered no solution, leaving them to solely rely on judicial and administrative proceedings. Similarly, the requirement for funds to be managed by an external company was continuously challenged in courts as an infringement of EU law. Finaly, the judgment of February 27, 2025 confirmed that denying the exemption to self-managed funds violates the free movement of capital.

Even though the new draft amendment seeks to end these two long-standing problems, it leaves some critical questions unanswered, the same introducing new complexities. In their article for International Tax Review Tomasz Janik and Marek Kończak, MDDP experts, show the critical issues concerning the new regulations:

“Following two landmark CJEU judgments long-standing discrimination against investment funds has finally been addressed in draft legislation. However, there is still work to be done; e.g., a relaxation of other exemption conditions and an extension of exemptions to third-country pension funds”.

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#MORE in the International Tax Review >> https://www.internationaltaxreview.com/article/2f3x6yiux3bri4bjkeu4g/sponsored/poland-proposes-overhauling-foreign-fund-tax-exemption-to-align-with-eu-law.