On 1 January 1 2025, Poland introduced a global minimum tax, in line with the OECD’s Pillar II BEPS framework and EU Directive 2022/2523 (GloBE Directive). The new provisions are included in the Act on Top-Up Taxation of Constituent Entities of International and Domestic Groups.

The new provisions provide that large multinational and domestic groups are subject to an effective tax rate of at least 15%. This aims to reduce shifting profits to low-tax jurisdictions and foster a fairer international tax system. The global minimum tax rules apply to groups with consolidated revenues of at least EUR 750 million in at least two of the four fiscal years. These regulations apply to both multinational groups operating across borders and large domestic groups.

Implementing regulations in Poland

Poland, implementing GloBE Directive, applied a qualified domestic top-up tax pursuant to which top-up tax is to be calculated and paid on the surplus profit of all low-taxed constituent entities located in Poland. As a result, if the effective tax rate of Polish companies belonging to multinational group is lower than 15%, the Polish company with the lower tax rate will be obligated to pay a top-up tax in Poland.

Although the basic CIT rate in Poland is 19%, the effective tax rate will be calculated not only on the basis of CIT but also of other taxes. Moreover, various tax exemptions used by the Polish companies will be taken into account.

Taxation period

Although a Polish company may be subject to the top-up tax for the tax year starting after 1 January 1 2025 and therefore it will file a tax return and pay tax in 2027, the new act provides that the Polish company may voluntarily submit itself to taxation for the 2024 tax year. This is due to the fact that Poland was one year behind in implementing of the GloBE Directive. The declaration of early coverage under the global minimum tax must be filed between 1 March 2026 and 30 May 2026.

The fact that the Polish company may not be subject to domestic top-up tax in 2024, may impact the global minimum taxation of the group’s parent company for this year. The parent company will thus have to take into account the taxation of the Polish company in 2024 when calculating the effective tax rate.

Uncertain future of new provisions

The future of global minimum tax remains uncertain as the USA has withdrawn from its implementation. In addition, not all OECD members have implemented the new regulations to their national legal systems, which raises questions about the efficiency of the new law.

In case of any questions related to the global minimum tax or the need to verify the fulfillment of the conditions for applying this tax to a Polish company, do not hesitate to contact us.