New anti-abusive regulations – tax losses

Most important amendment in CIT and PIT for 2021 was a change of personal income tax liability of partnerships. So far they were tax transparent but suddenly they become – or will become shortly – tax opaque.  

However, this is not only a negative modification of the Polish tax law introduced this year. It is worth to remember that specific anti-abusive regulation was implemented on the settlement of tax losses. 

As you may know a tax loss from the given source of revenue – active or “passive” – may be offset with income generated from the same source of revenue within 5 subsequent tax years. 

According to the general rule, not more than 50% of the tax loss may be offset in the given year. However, as of 2019, a new feature was introduced – a taxpayer may offset the tax loss up to the threshold of PLN 5M, whereby the remaining amount of the tax loss may be offset within the next 5 tax years, “50% cap” applicable. 

Under the new regulation introduced as of 2021 a tax loss may not be offset in case two conditions are jointly met:

1. a taxpayer:

  • took over another entity or
  • acquired an enterprise or its organized part or
  • acquired pecuniary contribution for which it acquired an enterprise or its organized part

2. as a result of the above operation (i) the type of business activity actually conducted by the taxpayer after the operation is, wholly or partially, different than prior to the operation or (ii) at least 25% of the shareholding of the taxpayer is held by an entity or entities who did not hold these shares at the last day of the tax year in which the tax loss was incurred. 

The above should be taken into account in case a Polish entity is under a business or ownership restructuring. 

Should you wish to discuss this in details, please contact us:

Łukasz Bączyk
Head of TaxBoard Member

Paweł Jóźwik
Tax Manager – Attorney-at-law

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