Income tax report

New obligations for subsidiaries and branches from 2025

Following the amendment to the Accounting Act of 12 April 2024, announced on 23 April 2024, Polish companies will be required to prepare and publish an income tax report for the first time. These provisions implement Directive (EU) 2021/2101 of the European Parliament and of the Council and are aimed at counteracting aggressive tax practices and increasing the transparency of the settlements of the largest capital groups. Additional reporting obligations may also apply to Polish companies, even if they don't operate on a large scale, if they belong to larger, international groups of entities.

Who is affected by the new obligations?

The statutory reporting obligation covers two main categories of entities:

 1. Top-level parent entities and independent entities:

• whose revenues in the last two financial years exceeded PLN 3.5 billion,
• regardless of their place of residence, if they conduct business operations in Poland,
• this applies, among others, to limited liability companies, joint-stock companies, joint-stock partnerships and certain partnerships, if the partners responsible for their dues are exclusively capital companies.

2. Subsidiaries and branches:

The obligation to prepare and publish an income tax report may also rest with a Polish subsidiary or branch if certain conditions are met. This obligation arises in particular when a parent company outside the EEA does not publish the required report or provide data enabling its preparation by a local entity.

This applies to:

A subsidiary, if:

• exceeds at least two of the three thresholds specified in Article 3(1)(1b) of the Accounting Act:
  • PLN 66 million in net revenue from the sale of goods and products,
  • PLN 33 million in total balance sheet assets,
  • 50 full-time equivalent employees on average per year;
• and is controlled by a parent entity with its registered office or management outside the European Economic Area, whose consolidated revenues exceed EUR 750 million in each of the last two financial years.

A branch, if:

• it independently generates revenues exceeding PLN 66 million in each of the last two financial years,
• and was established by a foreign entity from outside the EEA which:
  • is an independent entity with revenues exceeding EUR 750 million, or
  • belongs to a capital group whose parent company exceeds this threshold and does not have a subsidiary in the EEA that meets two of the three financial criteria above.

In such a case, the subsidiary or branch in Poland becomes obliged to comply with the reporting obligation. If they do not receive the required data from the head office, they are not excused from fulfilling the obligation. In such situation, they must prepare the report themselves on the basis of the information they have and submit a statement that the data has not been made available by the parent or independent entity.

What does the report contain?

The report is prepared as at the balance sheet date and includes data on:

• the parent or independent entity,
• all subsidiaries (covered by consolidation),

The data is provided with a breakdown by country of operation (including the EEA, tax havens and other countries).

The scope of information includes, among other things:

• name and registered office of the parent/independent entity, list of subsidiaries,
• description of the nature of the business,
• number of employees (full-time equivalent),
• revenues (including from transactions with related entities),
• profit or loss before tax,
• tax payable (excluding deferred tax),
• tax actually paid (including withholding tax),
• undistributed profit from previous years,
• indication of the legal basis for preparing the report.

The regulations provide for the possibility of "omitting" information if its disclosure would have a significantly detrimental effect on the entity's market position. However, this requires an appropriate description of the omitted information and the reason for its omission. This can only be a temporary omission (the omitted information must be disclosed in a later income tax report no later than 5 years from the date of omission).

Deadlines and form of fulfilment of the obligation

The income tax report, together with any statement, must be submitted to the National Court Register and published on the entity's website, where it must be available continuously for at least 5 years. These documents must be signed with a qualified electronic signature, a trusted signature or a personal signature. The report is submitted by the head of the entity as defined by accounting regulations. The deadline for fulfilling these obligations is 12 months from the balance sheet date.

The first period for which the report must be prepared is the financial year beginning after 21 June 2024.

If the parent company (or independent entity) does not submit the completed income tax report or provide the data necessary to prepare it, this obligation passes to the subsidiary or branch operating in Poland. In such a case, they are required to:

1. prepare the report themselves on the basis of the information they have or have obtained,

2. submit a statement that the parent company (or independent entity) has not provided the required data.

Failure to publish or submit the required documents on time may result in formal consequences and liability for the person managing the entity. Therefore, it is particularly important to start analysing the group's structure as early as possible, determine the location of the parent entity, properly communicate the significance of the new requirements and the impact of its actions (or lack thereof) on the Polish entity within the group and establish internal communication procedures within the capital group.

How can we help?

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

Stage 1: Analysis and identification of the obligation

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

Stage 2: Communication with headquarters

• preparation of requests for data transfer or reports (also in English),
• support in contacts with parent entities.

 Stage 3: Preparation of documents

• preparation of income tax returns in accordance with the law,
• preparation of required statements.

Stage 4: Publication and technical compliance

• support in submitting documents to the National Court Register,
• assistance with publication on the website,
• ensuring formal compliance, including electronic signatures.

Stage 5: Internal procedures and training

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

Do not wait until the last minute.

The requirements are time-consuming, and obtaining data from foreign headquarters can take many months. It requires an intensive information campaign to raise awareness of the scope and importance of the new obligations.