Settlement of diverted profits tax
We would like to inform you about the upcoming deadlines for the settlement of diverted profits tax and of minimum tax. The key assumptions of each are
outlined below.
TAX ON DIVERTED PROFITS
This tax applies to Polish companies, tax capital groups, and non-residents operating in Poland through a permanent establishment,
including, among others, branches of foreign entrepreneurs that settle CIT in Poland.
In principle, diverted profits tax shall be imposed on passive expenses incurred for the benefit of:
- an affiliated entity with its registered office or management in a so-called tax haven, and
- an affiliated entity having its registered office or management in a country with which Poland or the EU has not ratified an international treaty that provides a basis for obtaining tax information from the tax authorities of that country, specifically, a double taxation treaty.
In contrast, in the case of passive expenses incurred for the benefit of other foreign affiliated entities, the obligation to pay tax may not arise when certain conditions are met, such as when:
- the sum of passive expenses incurred for the benefit of foreign affiliates is less than 3% of the total deductible expenses, or
- income (revenue) of a foreign affiliated entity derived from passive expenditure is taxed at an income tax rate higher than 14.25%.
Passive expenses include, but are not limited to: costs of intangible services, IP rights fees, expenses related to the transfer of debtor default risk, debt financing costs, exit fees.
Tax rate: 19% of total passive expenditure
Deadline: 31 March 2026 - for taxpayers whose tax year coincides with the calendar year
MINIMUM TAX
The minimum tax covers CIT taxpayers (including Polish capital companies and branches of foreign companies) that in 2025:
- incurred a tax loss on the so-called operating activities, or
- have achieved an operating tax return (calculated as the share of tax income in tax revenue) of no more than 2%.
Tax rate: 10% of the tax base
Deadline: 31 March 2026 - for taxpayers whose tax year coincides with the calendar year
Polish regulations provide for numerous exemptions from the minimum tax, including, inter alia, for taxpayers commencing their activities (in the year of commencement and in two consecutive tax years), the so-called small taxpayers and taxpayers that have earned income at least 30% lower than in the previous tax year.
Should you have any questions relating to the tax on pass-through income or the national minimum tax, please feel free to contact us: office@tias.pl
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