Poland minimum tax: The global (Pillar Two) and the local version

Poland has started work to implement a global minimum tax (Pillar Two) which is a European Union initiative to ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the EU.

Pillar Two – global minimum tax in Poland

The Ministry of Finance has published a draft of the act which will integrate the provisions of the 15% global minimum tax into the Polish tax system. The global minimum tax will not only apply to large international groups, but also groups whose component units are all located in the same Member State (referred to as ‘domestic groups’). The threshold for the amount of consolidated revenue, after which the tax will apply, has been set at EUR 750 million (in at least two of the four tax years immediately preceding the tax year under review).

The act is expected to come into force on 1 January 2025. However, as the draft is still under consultation, its final form is not yet known, explain the Ecovis experts.

Origin of the act

The draft act presented by the Ministry of Finance implements the provisions of Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the EU.

The Directive transposes the OECD Global Anti-Base Erosion (GloBE) Model Rules into EU secondary law and is aimed at eliminating the tax practices of multinational companies, enabling them to shift profits to countries where they are subject to no or very low taxation.

The aim of the tax changes is to prevent companies from transferring their income to countries with lower taxes.

Hubert Kaczyński, Tax Advisor, ECOVIS Poland, Warsaw, Poland

Practical issues

It is expected that nearly 140 countries and tax jurisdictions may introduce Pillar Two regulations in the coming years.

In practice, it is assumed that several thousand entities (primarily Polish component units of international groups, usually with a top-level parent located in another country) will be required to apply the effective tax rate test for the purposes of this regulation. However, the global minimum tax will only apply to a few dozen international groups with a Polish top-level parent.

The minimum tax payable will be the difference between the minimum rate of 15% and the effective tax rate (so-called ETR) calculated for the given country or jurisdiction.

In addition to the potential additional burden of having to pay a ‘top-up’ tax, the new regulations will also require entities to collect a large amount of data, as well as face significant new organisational challenges, including among others:

• Performing a complex tax and accounting analysis
• Performing a series of calculations taking into account a large number of exceptions, adjustments and selections
• The collection of data from the countries in which the group operates
• Taking into account different tax exemptions
• Fulfilling new reporting obligations

Local minimum tax in Poland

In addition, companies must remember that a minimum corporate tax has been in effect in Poland since 1 January 2024. The minimum tax applies to:

• Taxpayers whose registered office or management board is located in the Republic of Poland and who are thereby subject to taxation on their entire income, regardless of where the income is earned.
• Tax capital groups.
• Taxpayers operating through a foreign establishment located in the Republic of Poland.

These points apply to all those who have reported a loss on operating activities or whose share of income in operating revenue is lower than 2% in a given tax year.

The minimum tax is a new form of taxation which applies alongside the “classic” CIT. This means that every CIT taxpayer will also have to provide information relating to the minimum tax.

For further information please contact:

Hubert Kaczyński, Tax Advisor, ECOVIS Poland, Warsaw, Poland
Email: hubert.kaczynski@ecovis.pl