Polish Parliament adopted the amendment of the acts on income taxes, introducing the provisions on taxation of Controlled Foreign Corporations (CFC). The primary aim of the implemented amendments is to limit the transfer of Polish taxpayers income to the countries of the preferential tax regime. New law will enter into force since the 1st of January 2015.
The construction of the taxation of controlled foreign corporations implies the taxation in Poland, as an income of the domestic entity, an income of the foreign entity which is the dependent entity of the domestic entity, in respect of the dependent entity profits which were gained in the country of the preferential tax politics. The CFC clause will be used in the situation of exercising the control by Polish taxpayer over a foreign company (it will be sufficient possessing 25% of the shares in the capital of the dependent company) registered in the state, which applies lower level of income taxation than taxation applicable in Poland (25% less would be sufficient). The CFC clause will be applicable to controlled companies whose income will in at least 50% come from financial sources (e.g. dividends, sale of shares).
The CFC rules will not be used to income of those controlled companies who will perform actual business activity, so they are not artificial structures, created only for tax benefits. The CFC rules will also not concern foreign companies, whose annual revenues do not exceed the limit of EUR 250,000.
Polish taxpayers will have to analyse existing and planned foreign capital relations, in order to take into consideration the new rules. It will be especially important to shape the scope of activities of the controlled companies in such a way that the subject of the activity meets the criteria of the actual business activity.
