A Poland Ministry of Finance Decree (the decree), published in the official Journal of Laws on 21 March 2023, defers the deadline for the corporate income tax (CIT) return and associated payment.
Under the decree, the obligation to pay CIT and file the year-end return for tax years ending between 1 December 2022 and 28 February 2023 has been deferred by three months, until 30 June 2023. This automatically defers the deadline for shifted-profits tax.
Tax on shifted profits
As a brief reminder, a new “tax on shifted profits” was introduced in 2022. The annual settlement for 2022 will be the first time that companies operating in Poland will need to assess their liability under this new levy; the decree defers this deadline by an additional three months.
The shifted-profits tax (at 19% rate) is levied on certain categories of costs (such as financing costs, royalty payments, payments for selected services and other types of expenses) incurred, directly or indirectly, with respect to payments to a foreign (non-Polish) related entity, if certain conditions exist.
Importantly, the regulations on shifted profits tax place the burden of proof on the Polish taxpayer to show that the conditions for triggering the shifted profit tax are not met.
The additional time provided by the three-month postponement to settle annual CIT offers a good opportunity for taxpayers, especially those making cross-border payments, to analyze and secure their CIT and shifted-profits tax positions.
Deferral of the annual filing deadline also offers additional time to finalize analyses regarding anti-hybrid regulations, implemented in Poland only two years ago, which could result in non-deductibility of significant amounts of expenses (including financing costs, service payments, depreciation and costs of goods sold in certain situations).
For additional information with respect to this Alert, please contact the following:
EY Doradztwo Podatkowe Krupa sp.k., Warsaw
Ernst & Young LLP (United States), Polish Tax Desk, New York