Tax Management Portfolio, Business Operations in Poland, No. 7300, contains information enabling foreign businesses to determine the best method of conducting their operations in Poland from both the tax and general legal points of view. To view this Portfolio, visit Bloomberg Tax for
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Tax Management Portfolio, Business Operations in Poland, No. 7300, contains information enabling foreign businesses to determine the best method of conducting their operations in Poland from both the tax and general legal points of view. It describes the practical problems that confront foreign businesses operating in Poland, as well as many of the other legal details vital to the organization of a Polish company.
The Portfolio provides a detailed explanation of the Polish system of income taxation, analyzing the statutory and procedural framework of Polish income taxation as applied to individuals and corporations. In addition, the Portfolio discusses the value added tax and excise taxes, the stamp duty, real estate tax and the inheritance and gift tax.
The Worksheets in the Portfolio contain a number of tax-related forms, including income and value added tax monthly returns. The Worksheets also contain a list of double taxation agreements and related protocols, a comparative table of withholding rates, and the Poland-United States Income Tax Treaty. A complete list of documents appears in the Table of Worksheets.
This Portfolio may be cited as Boruc, 7300 T.M., Business Operations in Poland.
Slawomir Boruc graduated from the Department of Law and Administration at the University of Warsaw in 1992. Slawomir Boruc is a Partner in the Warsaw office of Baker & McKenzie and heads the Tax Group. He has been working for Baker & McKenzie since July 1992, specializing in resolving tax law problems. He has advised many firms, including firms in the IT, chemicals, and printing and textile industries, and one of the largest telecommunications companies in the world. He has represented clients before tax authorities and in tax cases before the Supreme Administrative Court. He is a member of the Warsaw District Chamber of Legal Advisors and of the National Chamber of Tax Advisors.
Table of Contents
Detailed Analysis I. Poland — An Overview A. Poland — the Country, People and Economy 1. Population 2. Political Organization 3. Economic Structure B. Sources of Law 1. Statutes 2. Court System 3. Alternative Dispute Resolution II. Operating a Business in Poland Introductory Material A. Foreign Investment Regulations 1. General 2. Suspension of Business Activity 3. Foreigners 4. Branch Offices and Representative Offices 5. Incentives a. Tax Incentives b. Nontax Incentives c. State Aid 6. Trade Licenses and Permits 7. Transaction Permits 8. General Notification Requirements B. Currency and Exchange Controls C. Trade and Commerce Regulation 1. Imports and Exports a. Licenses and Quotas b. Customs Duties and Other Taxes c. Documentation 2. General Business Regulations a. Enforcement of the Antitrust Act (1) Practices Restricting Competition (2) Anticompetitive Agreements (3) Exemptions (4) Abuse of Dominant Position b. Anticompetitive Practices — Fines c. Commitment Decisions d. Leniency e. Fines Policy f. Merger Control (1) Notification Requirement (2) Exemptions (3) Noncompete Covenants (4) Powers of the Office for Competition and Consumer Protection (5) Fines g. European Union Antitrust and Merger Control Law h. Unfair Trade Practices (1) Acts of Unfair Competition (2) Penalties i. Consumer Protection (1) Fines (2) Unfair Commercial Practices (3) Claims j. Abusive Clauses k. Price Controls l. Securities Regulation (1) Shares (2) Bonds (3) Other Securities (4) Organized Trading in Securities (5) Investment Funds (a) Open-ended Funds (b) Specialist Open-ended Funds (c) Closed-ended Funds (d) Special Investment Fund Structures (e) Special Types of Investment Funds (f) Mixed Funds D. Licensing and Franchising 1. General 2. Protection Afforded to Intangible Property Rights a. International Treaties b. Patents c. Petty Patents — Utility Models d. Industrial Designs e. Topography of Integrated Circuits f. Trade and Service Marks g. Geographical Indications and Designations of Origin h. Trade Names i. Know-how j. Copyright k. Anti-counterfeiting E. Employment of Foreign Individuals in Poland 1. Necessary Authorizations a. Issuing of Work Permit b. Issuing of Work Visa or Temporary Residence Card c. Issuing of Residence and Work Permit in One Procedure 2. Regulations on Employment of European Union Citizens in Poland F. Labor Relations 1. Individual Labor Law a. Definition of Employment Relationship b. Continuing Employment after Merger or Takeover c. Termination d. Remuneration Regulations e. Restriction on Competition f. Work Regulations 2. Collective Labor Agreements 3. Co-determination — Employee Participation on Corporate Boards a. Act on Trade Unions b. Act on European Work Councils c. Action on Information and Consultation of Employees 4. Redundancies 5. Social Insurance 6. Temporary Employment Agencies G. Financing the Business 1. Shareholder Financing a. Equity Capital b. Shareholders' Loans (1) Forgiveness or Waiver of a Shareholder's Loan (2) Silent Participation Agreement (spolka cicha) (3) Participation Rights c. Debt/Equity Considerations 2. External Financing H. Combating of Corruption 1. Polish Criminal Code 2. International Conventions I. Provision of Payment Services and Operation of Electronic Money Institutions 1. Payment Services Provided by Payment Institution 2. Services Provided by Electronic Money Institution 3. Payment Services Provided by National Payment/National Electronic Money Institutions 4. Payment Services Provided by Payment Services Offices 5. European Union Payment Services/Electronic Money Providers 6. Cross-border Activity of Payment Institutions and Electronic Money Institutions 7. General Remarks III. Forms of Doing Business in Poland A. Principal Business Entities 1. Sole Proprietorships and Partnerships a. Registered Partnerships b. Professional Partnerships c. Limited Partnerships d. Partnerships Limited by Shares 2. Limited Liability Company 3. Joint Stock Company 4. Branch of a Foreign Entrepreneur and Representative Office 5. European Economic Interest Grouping 6. European Company 7. Other Entities B. Limited Liability Company 1. Formation a. Scope of Activities b. Corporate Name c. Incorporators d. Articles of Association e. Share Capital f. Incorporation Procedure g. Costs of Incorporation h. Company in Process of Organization i. Registration of a Limited Liability Company within 24 Hours 2. Operation a. Licenses b. Amendment of the Articles of Association c. Increases and Decreases in Share Capital d. Acquisition of a Company's Own Shares e. Management Board f. Supervisory Board/Audit Commission g. Shareholders' Meeting h. Books and Records i. Financial Statements j. Dividends and Other Forms of Profit Distribution k. Reserves 3. Merger 4. Dissolution and Liquidation 5. Reorganization (Domestic and International) 6. Corporate Spin-offs C. Joint Stock Company 1. Formation a. Scope of Activities b. Corporate Name c. Incorporators d. Statute e. Share Capital f. Incorporation Procedure g. Costs of Incorporation h. Company in Process of Organization 2. Operation a. License b. Amendment of the Charter c. Increases and Decreases in Share Capital d. Acquisition of a Company's Own Shares e. Management Board f. Supervisory Board/Audit Commission g. General Meeting of Shareholders h. Books and Records i. Financial Statements j. Dividends and Other Forms of Profit Distribution k. Reserves 3. Mergers 4. Dissolution and Liquidation 5. Reorganization D. Limited Partnership 1. Formation a. Scope of Activities b. Corporate Name c. Incorporators d. Articles of Association e. Capital and Contributions of Partners f. Incorporation Procedure g. Costs of Incorporation h. Registration of a Limited Partnership Within 24 Hours 2. Operation a. License b. Amendment of Articles of Association c. Management d. Supervision e. Books and Records f. Financial Statements g. Dividends and Other Forms of Profit Distribution h. Reserves 3. Mergers 4. Dissolution and Liquidation 5. Reorganization 6. Division E. Representative Office of a Foreign Entrepreneur 1. Registration 2. Liability 3. Books and Records IV. Principal Taxes A. Personal Income Tax B. Corporate Income Tax C. Value Added Tax and Excise Taxes D. Transfer Tax and Stamp Duty E. Inheritance and Gift Tax F. Industry-specific Taxes 1. Gaming Tax 2. Mining Tax and Hydrocarbon Tax 3. Financial Institutions Tax 4. Retail Tax G. Payments on Profits Made by Companies Owned by the State Treasury and State Enterprises H. Local Taxes and Fees I. Agricultural and Forest Taxes J. Tax Relief in Special Economic Zones V. Taxation of Domestic Corporations A. What Is a Domestic Corporation? B. Corporate Income Tax 1. Taxation of Worldwide Income 2. Accounting a. General b. Tax Year c. Tax Year Versus Financial Year d. Accounting Methods e. Consolidated Returns 3. Calculation of Income a. General b. Capital Gains (1) General Rule (2) Capital Gains Realized on the Sale of a Fixed Asset c. Dividend Income d. Accrued Income e. Foreign Exchange Differences f. Income from Particular Sources g. Income from Foreign Sources h. Exclusions from Income i. Taxation of Investment Funds 4. Business Expenses a. General b. Organizational Expenses c. Travel, Advertising and Entertainment Expenses d. Interest and Royalties e. Charitable and Other Donations f. Rent g. Repairs and Maintenance h. Casualty Losses i. Depreciation and Amortization (1) General (2) Basis and Methods of Depreciation (3) Depreciation Rates (4) Accelerated Depreciation j. Shares k. Bad Debts l. Reserves m. Salaries and Wages n. R&D Expenses o. Health Care Expenses p. Items Not Treated as Tax Deductible Expenses 5. Capital Expenditure 6. Loss Carryovers and Carrybacks 7. Foreign Tax Credit (or Exemption) 8. Taxation of Activity of Controlled Foreign Company 9. Calculation of Taxable Income and Tax Rates 10. Administration — Returns and Payments a. Monthly Reconciliation b. Annual Reconciliation 11. Special Corporate Income Tax Relief a. General b. Permits c. Relief Related to New Investment Expenditure d. Relief Related to Employment e. Tax Relief in Special Economic Zones — Poland's Membership in the European Union 12. Tax Relief with Respect to Commercialization of Intellectual Property VI. Taxation of Foreign Corporations A. What Is a Foreign Corporation B. Determination of Taxable Income 1. Business Profits 2. Income from Capital Investments a. General b. Royalties c. Interest d. Dividends e. Capital Gains from the Sale of Polish-situs Real Property and Related Rights f. Management, Control, Guarantee, Advisory or Market Research or Similar Services C. Method of Assessment — Tax Rates D. Subsidiary versus Branch 1. Scope of Activities 2. Method of Taxation VII. Intercompany Prices: Adjustment and Reporting Introductory Material A. Scope of the Provision B. Competent Authorities C. Advance Pricing Agreements D. Transactions Subject to Reporting VIII. Taxation of Partnerships IX. Taxation of Resident Individuals A. Scope of Taxation B. Residence C. Determination of Income 1. Taxation of Employee Salary a. Definition b. Withholding at Source 2. Taxation of Income from Independent Personal Services a. In General b. Income Derived from Personal Activities under a Management Contract 3. Income from Business Activities a. Determining the Amount of Revenue (Gross Income) b. Business Expenses c. Method of Payment of Tax 4. Income from Real Property 5. Investment Income and Capital Gains 6. Gains from the Sale or Exchange of Real Property and Certain Property Rights 7. Income from Undisclosed Sources 8. Taxation of Small Business Owners D. Calculation of Taxable Income, Allowances, Deductions and Exemptions 1. Deductions 2. R&D Expenses 3. Exemptions 4. Exemptions for Income Derived Within Special Economic Zones 5. Tax Relief with Respect to Commercialization of Intellectual Property E. Tax Rates F. Assessment and Filing G. Joint Taxation of Spouses 1. In General 2. Benefits of Joint Income Tax Settlement H. Taxation of Persons Raising Children Single-Handedly X. Taxation of Nonresident Individuals A. General B. Business Income C. Income from Personal Services 1. Taxation of Employees' Salaries 2. Taxation of Income from Independent Services D. Investment Income 1. Interest 2. Dividends E. Royalties F. Capital Gains 1. Sale of Shares in a Polish Company 2. Other Capital Gains G. Method of Taxation XI. Shares XII. Value Added Tax and Excise Tax Introductory Material A. Scope of Taxation B. Taxpayers C. Taxable Activities 1. Supply of Goods 2. Supply of Services 3. Intra-European Union Acquisition of Goods 4. Intra-European Union Supply of Goods 5. Export and Import of Goods D. Place of Supply 1. Place of Supply of Goods 2. Place of Supply of Services a. Introduction b. Transactions Between Value Added Tax Taxpayers c. Transactions Between Value Added Tax Taxpayers and Consumers d. Exceptions to General Rules E. Exemptions 1. Exemptions Based on Type of Activity 2. Exemptions Based on Turnover 3. Other Exemptions F. Filing Procedures and Reporting 1. Tax Returns 2. Unified Audit File G. Value Added Tax Deductions H. Refund of Tax I. Time Limits for Refund of Tax J. Refund of Polish Value Added Tax to Foreign Entities K. Excise Tax 1. Taxable Activities 2. Taxpayers 3. Excise Tax Suspension Procedure 4. Payment Rules and Periods XIII. Transfer Tax A. Scope of Taxation B. Civil Law Acts Not Subject to Transfer Tax C. Exemptions D. Tax Liability E. Taxable Base F. Rates of Transfer Tax G. Payment of Transfer Tax XIV. Stamp Duty A. Scope of Taxation B. Exemptions from Stamp Duty C. Rates of Stamp Duty D. Liability for Payment XV. Real Property Tax A. Scope of Taxation B. Property Not Subject to Real Property Tax C. Taxpayers D. Taxable Base E. Tax Rates F. Exemptions G. Procedures H. Real Property Tax Register XVI. Inheritance and Gift Tax A. General B. Tax Liability C. Taxable Base D. Tax Rates E. Tax Relief for Residential Purposes F. Tax Treaties XVII. Tax on Means of Transportation A. Taxable Types of Means of Transportation B. Tax Liability C. Tax Rates D. Deadlines for Paying the Tax E. Exemptions XVIII. Substance Over Form and the Tax Law Circumvention Clause XIX. Binding Rulings Issued by the Minister of Finance A. Individual Tax Rulings B. General Tax Rulings XX. Controlled Foreign Corporation (CFC) Regime XXI. Avoidance of Double Taxation Introductory Material A. Tax Credit and Exemption Methods B. Tax Treaties 1. Existing Tax Treaties 2. Taxation of Business Income a. Permanent Establishment b. Business Profits 3. Taxation of Investment Income a. Dividends b. Interest c. Royalties 4. Poland-United States Tax Treaty
Table of Worksheets Worksheet 1 CIT-8 Corporate Income Tax Annual Return Worksheet 2 VAT-7 VAT Monthly Return Worksheet 3 VAT-R Registration Form for VAT Taxpayers Worksheet 4 NIP-2 Tax Identification Number Registration Form Worksheet 5 IFT-2/IFT-2R Information Regarding Withholding Tax on Royalties and Interest Worksheet 6 CIT-6R Information Regarding Withholding Tax on Dividends Worksheet 7 List of Countries with Which Poland Has In Force Income Tax Treaties and Other Tax-Related Agreements as of March 31, 2018 Worksheet 8 [Reserved.] Worksheet 9 1974 Poland-United States Income Tax Treaty Worksheet 10 Ordinance of the Minister of Finance of April 23, 2015, Concerning Territories and Countries Considered to Be Harmful Tax Competitors for Purposes of Corporate Income Tax Worksheet 11 List of Countries Complying with the Rule of Reciprocity and EU Member States, for Purposes of Applying for a VAT Refund
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