Holding company in Poland

Holding company in Poland
Marek Cieślak

Marek Cieślak

CEO CGO Finance

Holding company in Poland has been operating in tax law since 1 January 2022. Its status allows to take advantage of income tax exemptions. Find out what the institution of a Polish holding company is all about.

Table of Contents

Holding company in Poland – statutory definition

The legal basis for functioning of Polish holding companies is the CIT Act. Chapter 5b of the Act regulates their taxation. It also specifies the definition of a holding company.

According to the Corporate Income Tax Act, a holding company is:

  • a limited liability company,
  • a simple joint-stock company,
  • a joint-stock company

that is subject to CIT and meets the conditions specified in the regulations. What are these conditions?

The Corporate Income Tax Act states that a holding company:

  • holds directly  at least 10% of shares (stocks) in the capital of a subsidiary company
  • is not a company that forms a tax capital group,
  • does not benefit from tax exemptions,
  • conducts a real economic activity.

Shares (stocks) in a holding company cannot be held by a shareholder who has their headquarter, management, registration, or location in a territory or country that:

  • is listed in the EU list of non-cooperative jurisdictions for tax purposes adopted by the Council of the European Union,
  • with which Poland has not ratified an international agreement. It particularly concerns a double taxation avoidance agreement. Also, the country with which the EU hasn’t ratified an international agreement that forms the basis for obtaining tax information.

An entity can be recognized as a holding company only if it fulfils all the above conditions.

Several requirements are also established regarding the subsidiary of a Polish holding company.

The CIT Act defines a subsidiary as a company that meets the following conditions:

  • the holding company directly holds at least 10% of shares (stocks) in the capital of that company based on ownership rights;
  • it doesn’t have the right to participate in an investment fund or in a collective investment institution. It also doesn’t have other property rights related to receiving benefits as a founder or beneficiary of:

– a foundation,

– a trust or other entity,

– a legal relationship of a fiduciary nature, or

– other rights of a similar nature;

  • it is not a company that forms a tax capital group.

 Both holding companies and subsidiaries must meet the conditions described above:

  • on the day preceding the receipt of dividends or the disposal of shares (stocks),
    • continuously for a period of at least 2 years.

What is the register of shareholders? Who maintains it and for what purpose? Find out from this article.

Holding company in Poland – the concept of the institution

The essence of the holding company in Poland institution consists of:

  1. Complete exemption from taxation of dividends paid by subsidiary companies to the holding company.
  2. Exemption from taxation of the sale of shares in subsidiary companies to unrelated entities

Dividends received by a holding company from subsidiary companies are subject to income tax exemption. This results from the CIT Act. The full exemption has been effective since 1 January 2023. The previous provision exempted dividends only up to 95% of their amount.

Income of a Polish holding company can also be exempt from income tax in the case of the sale of shares (stocks) of a subsidiary company to an unrelated entity. To benefit from the exemption, the Polish holding company makes a relevant declaration. It should be submitted to the head of a competent Tax Office. It is important to note that it must be done at least 5 days before the date of sale.

The statement of the holding company in Poland on the intention to use the exemption includes:

  1. Names, surnames, addresses, and tax identification numbers of the parties to the agreement.
  2. Name, address, and tax identification number of the subsidiary company which shares will be sold.
  3. Indication of the share in the capital of the subsidiary company that will be subject to the sale.
  4. Planned date of concluding the agreement.

The exemption does not apply if at least 50% of the value of the assets of these companies consists of:

  • Real estate located in Poland,
  • Rights to real estate located in Poland.

Summary

A holding company in Poland is an excellent alternative to a tax capital group. Its purpose is to create favourable conditions for entrepreneurs and keep capital in Poland.

If you found the above entry interesting and want to learn more about the topic, we invite you to cooperate with us. Experts from our accounting firm in Warsaw are at your disposal. Contact us today and let us help you.

Featured expert

Marek Cieślak

CEO CGO Finance