Poland plans to tax Polish-owned foreign corporations

Banking

Poland is considering legislation on controlled foreign corporations (CFC) with Polish owners, which would tackle tax avoidance by requiring such companies to pay a 19% tax on related profits. According to draft legislation prepared by the Ministry of Finance, a company will be regarded as a CFC if half or more of its revenue is derived from passive sources, and the Polish shareholder has a stake in the company of 25% or more, website Tax-news.com reported. Companies registered in countries with business tax rates that are 25% or more lower than those of Poland, will also be liable. The ministry has compared the proposals to similar legislation in various EU and non-EU countries, including the UK, Germany, and the US, and explained that the move has been recommended by the European Commission. It has also confirmed that double-taxation agreements will not be affected. According to the report, the ministry hopes to see the law come into effect from 2014.

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