CbC income tax report in Poland – new reporting obligation | News Flash

This year is the first reporting period for which large enterprises operating in Poland will be required to prepare and publish a CbC income tax report in Poland. This is a result of the implementation into Polish tax law of Directive (EU) 2021/2101 of the European Parliament and of the Council, which imposes an obligation on capital groups and independent entities to report data on income tax paid and other relevant tax information.

The new obligation will apply to both companies based in the EU and companies operating in the EU only through branches or subsidiaries. In Poland, the directive was implemented through an amendment to the Accounting Act, in which Chapter 6b entitled ‘Income Tax Report’ was added. These provisions specify the list of entities subject to the obligation, the scope of information to be disclosed, and the rules for publishing and making the CbC income tax report in Poland available.

Who will be required to prepare a CbC income tax report in Poland?

The obligation to prepare, publish and make available a CbC income tax report in Poland applies to:

1. Ultimate parent entities, if the revenues recognised in their annual consolidated financial statements exceeded PLN 3,500,000,000 in each of the last two financial years.
2. Independent entities, if the revenues recognised in their annual financial statements exceeded the threshold of PLN 3,500,000,000 in each of the last two financial years.

The above reporting obligation will apply only to the ultimate parent entity and independent entities that are:

• a capital company
• a limited joint-stock partnership
• a general partnership or limited partnership in which all partners with unlimited liability are capital companies, limited joint-stock partnerships or companies with a similar legal form from other countries.

Exemptions from the obligation

The following entities will be exempt from reporting under Polish tax law:

• ultimate parent companies and all their subsidiaries and branches, or independent entities and their branches having their registered office or permanent place of business solely in the territory of the Republic of Poland, or
• ultimate parent companies or independent entities that disclose information in their activity reports in accordance with Article 111a(1)(1) and (2) 2 of the Banking Law, provided that such information relates, respectively, to all activities carried out by related entities included in the annual consolidated financial statements of the ultimate parent entity or to all activities of the independent entity.

These exemptions define which companies are not obliged to prepare the CbC income tax report in Poland.

An ultimate parent entity is a parent entity that prepares annual consolidated financial statements covering the largest possible number of related entities within a capital group.

An independent entity is an entity that is not part of a capital group.

Obligations of subsidiaries and branches

The obligation to prepare, publish and make available income tax reports will also apply to subsidiaries and branches specified in the Polish Act.

The reporting obligation will apply to income tax reports of ultimate parent entities or independent entities with their registered office or place of management outside the EEA, respectively.

The following entities will be required to prepare, publish and make available CbC income tax reports in Poland:

• subsidiaries based in Poland, if:
  • they exceed the parameters of the Accounting Act for small entities in the last two years,
  • they are controlled by a parent entity outside the EEA whose consolidated revenues exceed EUR 750 million,
• branches in Poland, if:
  • their revenues exceed PLN 66 million in each of the last two years,
  • the parent company is based outside the EEA and its consolidated revenues exceed EUR 750 million.

If, despite requesting it from the ultimate parent company or independent entity, subsidiaries and branches do not receive a CbC income tax report in Poland, they will be required to prepare, publish and make available an income tax report concerning the ultimate parent entity or independent entity containing the information they hold, have obtained or acquired.

In addition, a subsidiary or branch will be required to prepare a statement confirming that it has not received an income tax return (or the information necessary to prepare it) from the ultimate parent company or independent entity.

Scope of information disclosed in the CbC income tax report in Poland

The report prepared as at the balance sheet date must cover all activities of the ultimate parent company or independent entity and all entities included in the consolidated financial statements for the financial year. The document should contain the following information:

1. the name of the ultimate parent entity or independent entity and a list of all subsidiaries included in the consolidated financial statements of the ultimate parent entity, for the financial year in question, having their registered office in a country belonging to the EEA or in the tax jurisdictions listed in Annexes I and II to the Council Conclusions;
2. financial year;
3. currency of presentation of the income tax report;
4. brief description of the nature of the business;
5. number of employees in full-time job;
6. revenues, including from transactions with related parties, which are understood to be related entities as defined in IAS, which constitute:
   • total revenues, excluding value adjustments and dividends received from related entities – in the case of entities having their registered office or place of management in the territory of the Republic of Poland which do not apply IAS,
   • revenue within the meaning of the financial reporting framework on the basis of which the financial statements are prepared, excluding value adjustments and dividends received from related entities – in cases other than those specified in point a);
7. the amount of profit or loss before tax;
8. the amount of income tax payable in a given financial year, which constitutes the current tax charge on taxable profits or losses in the financial year recognised by entities and branches in a given tax jurisdiction, without taking into account deferred tax and provisions for contingent tax liabilities;
9. the amount of income tax paid in the financial year by entities and branches in a given tax jurisdiction, including the amount of withholding tax paid by other entities in relation to payments to entities and branches within the capital group;
10. the amount of retained profit from previous years at the end of the financial year, including the amount of profit from previous financial years and the amount of profit from the financial year for which no distribution decision has been made, whereby in the case of branches, retained earnings from previous years means the retained profit from previous years of the entity that established the branch;
11. a statement that the report has been prepared in accordance with the regulations.

Form of the report

The CbC income tax report in Poland should be prepared:

• electronically, in Polish and in Polish currency,
• using a qualified electronic signature, a trusted profile or a personal signature.

Deadlines of CbC income tax report in Poland

The first report will cover the financial year beginning after 21 June 2024.

This means that for companies whose financial year corresponds to the calendar year, the first report will cover the 2025 financial year and must be published by 31 December 2026.

The manager of the entity is required to:

• submit the report to the National Court Register in Poland within 12 months of the balance sheet date,
• publish it on the entity’s website and keep it there for at least 5 years

In the case of a subsidiary or branch in Poland, the head of the entity shall, within 12 months of the balance sheet date, be required to:

1. submit to the relevant court register an income tax return prepared by the ultimate parent entity or the independent entity, if the subsidiary or branch has been designated to submit an income tax return to the register, or submit an income tax return together with a statement confirming that the ultimate parent company or independent entity has not made available the income tax return or the information necessary to prepare it;
2. publish the income tax return (in the case of an income tax return prepared independently, also a statement confirming that the ultimate parent entity or the independent entity, has not made available the income tax return or the information necessary to prepare it) on the website of the subsidiary or branch, whereby the report and statement shall be made available on that website for a period of at least 5 years.

The new obligation and existing CbC reports in Poland

The introduction of the CbC income tax report in Poland does not affect the obligations related to CbC-R reports and CbC-P notifications. They should still be prepared to the same scope and deadlines as before. The new obligation is an additional tool for tax transparency under Polish law, complementing the existing reporting system.

For more information on the CbC-R report, see our Transfer Pricing Guide.

Accace support

Accace supports companies in identifying their obligation to prepare a CbC income tax report, as well as in developing, publishing and implementing internal procedures to ensure compliance with the regulations. We also offer advice on existing CbC-R reports and CbC-P notifications to ensure full tax and reporting security. Please feel free to contact us.

Source: https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20240000619/U/D20240619Lj.pdf

Marcin Szczerbiński

Tax Supervisor | Accace Poland

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Jakub Czerski

Tax Director | Accace Poland

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