PCC Tax Poland: Regulations for Share Transactions Executed Abroad

Contracts for the sale of property rights concluded in Poland are legally subject to the Tax on Civil Law Transactions (PCC). However, the law is very broad. It includes the sale of “things or rights with an economic value”.

Under PCC, property rights are not limited to real estate, rights in rem, real estate rights, or similar rights. In order for civil law transactions to be subject to PCC, the subject of the transaction should be located in Poland at the time of the transaction, or concern property rights exercised in Poland.

Application of PCC on Foreign Assets

PCC is also charged on contracts that concern assets located abroad, or property rights exercised abroad, but only if the acquirer has its registered office in Poland and the civil law transaction was carried out in Poland.

The issue of actions performed in international transactions being subject to PCC may raise doubts, so it is always advisable to obtain confirmation from the tax office. In complicated cases, an individual tax interpretation should be obtained from the tax chamber, recommend the Ecovis advisers.

According to Article 7 of the Act on PCC, the rate is two percent on certain contracts of sale, including real estate, perpetual usufruct rights etc., and one percent on other contracts of sale concerning other property rights.

We will help you to pay the taxes due when concluding contracts on time and make the necessary declarations.

Agata Wleklińska, Tax advisor, ECOVIS LEGAL POLAND Law & Tax, Warsaw, Poland

The Effects of PCC on a Polish Limited Company

Shares in a Polish limited liability company are property rights exercised in Poland within the meaning of the act. This is because the property rights from the shares in the limited liability company to be sold are deemed to be exercised at the location of the company’s registered office.

An agreement on the sale of shares in a Polish limited liability company is subject to PCC regardless of where the purchaser has its registered office and where the transaction is executed. Even if the agreement were concluded outside Poland, the sale of shares would also have to be taxed in Poland. A notable exception to this is where shares are sold through a brokerage house in organised trading (e.g., on a stock exchange).

This position has been confirmed by tax authority rulings and administrative court judgments. No dissenting stance has been presented in any way, and Poland has not implemented the OECD guidelines, which recommend different rules.

How PCC is Calculated

It is important to note that PCC must be paid within 14 days of concluding the agreement. An appropriate PCC declaration must be filed within the same period. The tax of one percent of the market value of the shares is then paid by the purchaser.

For further information please contact:

Agata Wleklińska, Tax advisor, ECOVIS LEGAL POLAND Law & Tax, Warsaw, Poland
Email: agata.wleklinska@ecovis.pl