MDR at the 2025 year-end close

In February the draft amendments to the Polish Tax Ordinance were published for legislative process in the Parliament, providing for simplifications in Mandatory Disclosure Rules (MDR) reporting. Until the new regulations enter into force, however, taxpayers should continue to apply the current MDR framework. In practice, this means that when finalising the financial statements, the CIT-8 computation and the review of transactions for 2025, it is worth carrying out a structured review of events that may meet the hallmarks of MDR reportable arrangements.

Which hallmarks to focus on at year-end close

In practice, it is particularly useful to identify those risk areas that leave a clear footprint in financial and tax data. The most important ones include, in particular:

A significant impact on deferred tax exceeding PLN 5 million (Article 86a(1)(1)(a) of the Polish Tax Ordinance). It should be verified whether the impact of an arrangement on a deferred tax asset or deferred tax provision is material for the entity and whether, in aggregate during the year, it exceeds PLN 5,000,000. The mere recognition of a deferred tax asset or provision does not automatically mean that an arrangement is reportable, but significant changes in deferred tax should be analysed from an MDR perspective.

Potential withholding tax exceeding PLN 5 million (Article 86a(1)(1)(b) of the Polish Tax Ordinance). It is worth reviewing payments made to foreign recipients, in particular dividends, interest, royalties, lease payments and selected intangible services, as well as domestic payments for which the paying entity acts as a withholding agent. Helpful sources include not only the accounting books, but also tax returns and information forms, such as IFT-2R or CIT-10Z.

Income or revenue of a non-resident exceeding PLN 25 million in connection with an arrangement (Article 86a(1)(1)(c) of the Polish Tax Ordinance). At year-end, it is advisable to prepare a summary of the largest settlements with foreign entities and assess whether, on the non-resident’s side, there is income subject to limited tax liability in Poland. This is not limited solely to related-party transactions.

A difference exceeding PLN 5 million between the “hypothetical” tax in Poland and the tax actually paid abroad (Article 86a(1)(1)(d) of the Polish Tax Ordinance). This hallmark is more difficult to identify, but useful sources may include group data on effective tax rates, Country-by-Country reports, transfer pricing documentation and financial analyses showing where income is allocated within the group and what tax is paid on it.

Acquisition of a company with losses, discontinuation of its business activity and use of tax losses (Article 86a(1)(6)(e) of the Polish Tax Ordinance). Following the acquisition of an entity with significant tax losses, it is worth examining whether the company’s business activity is continued and whether there has been a change in the business profile combined with an attempt to use historical tax losses.

Use of unilateral transfer pricing simplifications, including the safe harbour for loans (Article 86a(1)(13)(g) of the Polish Tax Ordinance). If, in the transfer pricing documentation for 2025, the company relies on domestic simplifications without preparing a benchmarking analysis, it is worth assessing the consequences of this approach from an MDR perspective.

Transfer of functions, risks or assets resulting in a drop in EBIT of more than 50% (Article 86a(1)(13)(i) of the Polish Tax Ordinance). In the case of intra-group restructurings, financial projections and business assumptions before and after the transaction should be compared. If the expected result of the transferring entity decreases significantly, an in-depth MDR analysis is necessary.

Summary

Despite the announced legislative changes, the currently binding MDR regulations still apply at the stage of the 2025 year-end close. A well-planned review at the interface of accounting books, tax computations and business documentation helps reduce the risk of overlooking events subject to reporting. This is all the more important given that, in practice, the reporting deadline for most tax arrangements from 2025 will fall on 31 March 2026.