First corporate income tax reports coming soon – initial practical insights

This requirement applies not only to the largest groups, but also – in specific circumstances – to Polish subsidiaries and branches of entities established outside the EEA (e.g. the United States, China, Switzerland, Israel, the United Kingdom). The first reports will be prepared for financial years commencing after the aforementioned date; for most entities, this will mean reporting for FY 2025 (by the end of 2026), although for entities with non-standard financial years the obligation may arise earlier.

The report should, inter alia, include information on revenues, financial result (profit/loss), taxes (both accrued and paid), employment levels and a description of activities – broken down by tax jurisdictions.

From a financial reporting perspective, this entails the need to:

• verify whether the entity falls within the scope of the obligation,
• ensure compliance with local regulations,
• coordinate reporting with the group’s headquarters,
• prepare and publish the report or relevant statements within statutory deadlines.

We have prepared a publication in which we

• explain which entities fall within the scope of the obligation
• outline how to prepare for its implementation,
• present the scope of our support at each stage of the process.

We would be pleased to discuss how the new regulations may affect your organisation and to propose specific actions together with an appropriate implementation timeline.

Corporate income tax report – key information

The new regulations aim to enhance transparency and counteract aggressive tax practices; they also apply to entities belonging to large multinational groups.

The obligation applies to two main categories of entities:

1. Ultimate parent entities and standalone entities which:

• have generated revenues exceeding PLN 3.5 billion in each of the last two financial years,
• conduct business in Poland in a qualifying legal form (e.g. limited liability company, joint-stock company, limited joint-stock partnership, as well as selected partnerships).

2. Subsidiaries and branches in Poland, where specific conditions are met, in particular where the non-EEA parent entity does not publish the report or fails to provide relevant information (including confirmation that such report has been filed in another jurisdiction).

A subsidiary is subject to the obligation if:

1. It meets at least two of the following thresholds: PLN 66 million in revenues, PLN 33 million in total assets, 50 employees; and
2. It is controlled by a non-EEA entity whose revenues exceed EUR 750 million (in two consecutive years).

A branch is subject to the obligation if:

1. It generates revenues exceeding PLN 66 million (in two consecutive years); and
2. It belongs to a non-EEA entity exceeding the EUR 750 million threshold.

Where the parent entity fails to provide the required data, the Polish entity remains obliged to prepare the report based on available information and to submit an appropriate statement.

Scope of the report?

The report is prepared as at the balance sheet date and includes information relating to the parent entity and all consolidated subsidiaries, presented by jurisdiction (including EEA and other jurisdictions).

The scope of the report includes, inter alia:

• identification details and group structure,
• description of activities,
• employment data,
• revenues and profit before tax,
• accrued and paid income taxes,
• retained earnings,
• legal basis for preparation of the report.

Certain information may be temporarily omitted where its disclosure could be significantly prejudicial to the entity, provided that appropriate justification is given and such information is subsequently disclosed.

Deadlines and formal requirements

The report must be:

• filed with the National Court Register (KRS) and published on the entity’s website (for at least five years),
• signed electronically by the management,
• prepared within 12 months from the balance sheet date.

The first reporting period covers financial years commencing after 21 June 2024. Where the parent entity does not provide the report, the obligation effectively shifts to the Polish entity.

Failure to comply with the obligations in a timely manner may result in formal consequences and management liability. Accordingly, early preparation, group structure analysis and effective communication with the headquarters are essential.

Common deficiencies in foreign corporate income tax reports

A frequently considered simplification is the possibility to refrain from submitting the report pursuant to Article 63n(7) of the Polish Accounting Act, i.e. on the grounds that the report has been submitted by another entity within the EEA. Based on our experience, however, the information provided by foreign headquarters often covers the main financial data (such as revenues, profit before tax or taxes paid), but does not include all elements required under Polish regulations, in particular those of a formal and descriptive nature.

In practice, the most common deficiencies include the lack of a clear identification of the ultimate parent entity, the absence of a description of the nature of activities of individual entities, as well as the lack of confirmation that the report complies with the applicable regulations and that the data presented are consistent with the required statutory definitions.

Foreign reports frequently also fail to meet formal requirements regarding the language and currency of presentation, as well as the prescribed structure for presenting data by jurisdiction as required by the relevant provisions, which results in the need to adjust such reports at the local level prior to publication.

This gives rise to doubts as to whether the submission of a report by a foreign entity effectively relieves Polish group entities from the obligation to prepare and submit such report in accordance with Polish regulations.

 How can we assist?

Our Tax Advisory Team offers comprehensive support at each stage of the implementation of the new obligations:

Stage 1: Assessment and identification of the obligation

• verification whether the obligation applies to your entity,
• calculation of financial thresholds and identification of the group structure.

Stage 2: Communication with headquarters

• preparation of requests for the provision of data or the report (also in English),
• support in communication with parent entities.

Stage 3: Preparation of documentation

• preparation of a corporate income tax report compliant with statutory requirements,
• preparation of the required statements.

Stage 4: Publication and technical compliance

• support in filing documents with the National Court Register (KRS),
• assistance in publication on the entity’s website,
• ensuring formal compliance, including the application of electronic signatures.

Stage 5: Internal procedures and training

• implementation of annual reporting procedures,
• training for accounting and compliance teams.

Alternatively, we also provide support in the verification of information received from foreign entities in order to assess whether it allows the Polish entity to be exempt from local reporting requirements.

It is advisable not to postpone action until the last moment, particularly given that for certain entities (with financial years commencing shortly after 21 June), the deadline for fulfilling the obligations is approaching (12 months from the end of the financial year commencing after 21 June 2024).

The requirements are time-consuming, and obtaining the necessary data from foreign headquarters may take several months and require intensive internal communication efforts to ensure proper understanding of the scope and significance of the new obligations.
 

Contact us – will support your company in preparing for the evolving tax landscape.