On the website of the Government Legislative Centre on 16 September 2020 The Ministry of Finance published a draft amendment to the Personal Income Tax Act, the Corporate Income Tax Act, the Flat-rate Income Tax Act on certain revenues generated by individuals and certain other amending acts aimed at sealing the tax system by including the subject matter of the Corporate Income Tax Act established or managed in the territory of the Republic of Poland of the Polish limited companies and publicly owned companies meeting the relevant criteria.
It should be noted that, according to the Ministry of Finance, in recent years, a limited company has become second the most popular type of commercial law company, giving way to a limited liability company only.
In Poland, the construction based on making a limited liability partnership a natural person a partner of the company enjoys great popularity.
This design allows for a single taxation of business income while preserving the attributes of activities characteristic of capital companies (limited liability of the shareholder for the company's obligations).
Taxation of limited companies
According to the published draft, the status of the income tax taxpayer will be granted to limited companies established in the territory of the Republic of Poland.
Let us remind you that according to Article 102 Acts of the day 15 September 2000 – The Code of Commercial Companies by a limited partnership is understood by a passenger company intended to run a business under its own company, in which to creditors for the obligations of the company at least one the partner responds without limitation (complementary) and liability at least one the partner is limited.
Obtaining income tax status by a limited partnership will mean that the company will be the CIT taxpayer – not so far its partners (in the case of shareholders who are legal persons). The profits of such a company are to be taxed on the profits of the shareholders in the same way as on the profits of the legal persons.
The associate-complementary (a natural person) will therefore be taxable 19% income tax on individuals with the possibility of deducting the tax by the CIT limited company, in proportion to the proportion in which the sub-contractor participates in its profits.
Exemptions from taxation of limitedaries
In the case of limited companies, where the links between the shareholders do not indicate a ‘optimising objective’ of their creation, the introduction of an income tax exemption for the income of the limitedaries of such companies is envisaged. As explained by the Ministry of Finance, this exemption will result in an effective taxation of the income of such limitedaries on the share of profits of a limited partnership (taxed CIT rate of 9% the revenue obtained) will remain at a comparable level, until the effective taxation of such limitedaries resulting from the provisions of the CIT and PIT Act in force until the end 2020
However, it should be stressed that this exemption has a number of restrictions and obligations necessary to comply with it. The project provides that only exemption would be granted 50% the revenue from this, but not more than 60,000 PLN That kind of income a year.
In addition, the exemption provided for will be limited to commandants who fulfil the following conditions:
do not have directly or indirectly over 5% shares in a company having legal personality or capital company in a subsidiary organisation in that limited partnership;
are not members of the board of directors of a company having legal personality or a capital company in a subsidiary organisation in that limited partnership or a company having at least, directly or indirectly, 5% shares in a company having legal personality or a capital company in a subsidiary organisation in that limited partnership, or
is not an entity affiliated to a member of the management board or a member of a company having, directly or indirectly, at least 5% shares in a company having legal personality or a capital company in a subsidiary organisation in that limited partnership.
In addition, the introduction of the income exemption will oblige the payer – a limited partnership to calculate, collect and withdraw the amounts of flat-rate income tax due on the profits of the company paid to the limitedaries.
Taxation of public companies
According to the published draft, the status of the income tax taxpayer will be granted to publicly owned companies established or managed in the territory of the Republic of Poland whose shareholders are not only natural persons, but only those whose identity of their taxable shareholders is not known by the Polish tax authorities and will not be disclosed to them.
Exemption from taxation of public companies
The changes proposed by the MF will therefore not impose any additional tax burden on taxpayers/shareholders only if the following cumulative conditions are met:
the transfer by the company to the head of the tax office competent for its registered office and the information to the partner about shareholders/tax collectors gaining income from the share of its profits and the size of each of them' rights to such a share;
regulated by shareholders/tax collectors of the public company in accordance with the applicable tax obligations, for participation in profits established in Poland of the public company.
The identification of such shareholders/tax collectors will therefore be based on the information to be provided through the company.
However, if the public company would not disclose to the tax authorities the identity of all shareholders/tax collectors who have direct or indirect rights to its profits, in accordance with the proposed provision Article 1(3)(1a) CIT would become a corporate income tax taxable person and would be obliged to determine the income and income tax due to him and to transfer that tax to the tax office responsible for his establishment.