Several tax deductions will be limited in Poland by a corporate income tax bill published in the official gazette on 27 November 2017.
Limitation of interest expense.
Under the new measures, effective from 1 January 2018, the deduction of net financing costs will be capped at 30% of EBITDA. Net financing costs in excess may be carried forward for up to five years. These restrictions will not apply when the net financing costs do not exceed PLN 3 Mio (approx EUR 711,000).
Limitation on payments to related parties.
Further restrictions apply on specific payments made to related parties, as well as to persons based in “tax havens” (as defined by the Polish tax authorities; in the EU: Monaco and Andorra). The restricted payments are deductible up to 5% of EBITDA for amounts exceeding the threshold of PLN 3 Mio (approx EUR 711k). Payments in excess may be carried forward for up to five years. Restricted payments cover those made in connection with the following:
- intangible services (including consultancy services, market research, advertising services, management and control, data processing, insurance, guarantees and warranties, and other services of a similar nature);
- intangible assets (including royalties paid as consideration for the use of or the right to use trademarks, copyrights, etc.); and
- the transfer of default risk in connection with bad loans other than those granted by banks (for instance, by way of insurance, guarantees, etc.).
The aforementioned limitation is not applicable for costs incurred in direct connection with the production of goods and the supply of services.
Minimum Tax for Property Holders.
Taxpayers deriving income from commercial properties (shopping centers, department stores, office buildings, etc) valued at more than PLN 10 Mio (approx EUR 2,371,920) will be subject to a tax, payable monthly, levied at 0.035% of the value in excess of PLN 10 Mio (approx EUR 2,371,920). The deadline to declare and pay the tax is the 20th day of the month following the month of reference. The levy is considered a minimum income tax for taxpayers holding the aforementioned properties.
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