Sectoral article from Staniek & Partners.

Pillar II, also referred to as Filar II, is a global minimum tax introduced under the GloBE Directive, which is a part of the BEPS 2.0 initiative. Its purpose is to ensure a fair tax burden for the largest multinational corporations. The new regulations will come into force on January 1, 2025.

In Poland, using tax reliefs may result in an effective tax rate falling below international thresholds, which could lead to the requirement to pay an additional top-up tax under this global tax system.

This regulation will apply to capital groups that, in at least two of the last four tax years, have achieved consolidated revenues of at least EUR 750 million. This means that companies required to prepare CbC (Country-by-Country) reports will likely fall under the scope of Pillar II.

Changes Ahead – Implementation of New Regulations (New Draft Law)

On November 7, 2024, the Polish Parliament adopted a law on the supplementary taxation of entities belonging to international and domestic groups. This draft law aims to implement Council Directive (EU) 2022/2523, which introduces the global minimum tax, widely known as Pillar 2. However, it should be noted that the new regulations will not apply to all entities. Therefore, an analysis of the potential impact of this tax on business operations in Poland should be carried out with the help of experienced tax advisors.

Entities within capital groups with consolidated global revenues exceeding EUR 750 million annually will be subject to the new taxation.

Under the Polish draft law implementing Pillar 2, three types of supplementary taxes are proposed:

• Global Supplementary Tax (Income Inclusion Rule – IIR) – a tax that applies to jurisdictions other than Poland, resulting from the application of the qualified income inclusion rule.
• Domestic Supplementary Tax (Qualified Domestic Minimum Top-Up Tax – QDMTT) – A supplementary tax paid in Poland for the Polish jurisdiction, which is a key element of the supplementary taxation system from Poland’s perspective.
• Under-Taxed Profits Rule (UTPR) – This will act as a “back-up mechanism” in situations where the IIR is insufficient to cover all low-taxed jurisdictions where entities are located, provided that the Polish company is no lower than in the group’s structure.

Retrospective Application of the New Regulations for 2024

According to the plan, the new Polish regulations on the global minimum tax will come into effect on January 1, 2025. However, there is an option to voluntarily apply these regulations starting from the tax year beginning after December 31, 2023, based on a statement in the form of a notarial deed. The Ministry of Finance has announced that the Pillar 2 regulations in Poland and the accompanying legal acts will continue to undergo dynamic changes. Taxpayers should therefore expect further modifications.

Pillar 2 – Groundbreaking Figures Impacting At Least 7,000 Entities in Poland

As part of the OECD’s global initiative, approved by the European Commission, Pillar 2 introduces an advanced reporting system, which includes 480 key data points, allowing for a detailed analysis of multinational corporate groups’ activities. This aims to increase tax transparency worldwide and will also be implemented in Poland, where nearly 7,000 entities will be impacted.

It is estimated that the introduction of the new obligation will generate significant revenue for the Polish budget, potentially reaching PLN 10 billion over the next ten years. This demonstrates the enormous fiscal and economic potential that Pillar 2 brings to the tax system.

Additionally, adapting to the requirements of Pillar 2 involves expanding the tax administration workforce by almost 100 new specialists. These newly created positions will be crucial for effectively managing and enforcing the principles of this global tax, which may lead to increased inspections and verifications in this area.

Furthermore, taxpayers and businesses have limited time to prepare for the full implementation of the new regulations, with opportunities to benefit from various simplifications and exemptions. This opens up space for adaptive strategies that can minimize potential tax burdens and maximize the benefits arising from this new obligation.

Pillar 2 is not only an obligation but also an opportunity for companies to optimize their taxes and better align with global standards of tax responsibility. The announcements of further changes and adjustments in legislation only highlight that this is a dynamic process requiring ongoing attention and readiness for implementation.

New Obligations and Potential Effects for Polish Entities

• Information on supplementary taxation must be submitted to the relevant tax office for the tax year, with the filing deadline being the end of the fifteenth month after its conclusion. Exceptionally, for the first tax year, this deadline has been extended to 18 months.
• The statement on the amount of supplementary tax owed must be filed by taxpayers affected by the global, domestic supplementary tax, and the under-taxed profits tax, with the filing deadline being the end of the eighteenth month after the conclusion of the tax year. For the first tax year, this deadline has been extended to 21 months.
• Payment of the tax resulting from the statement should be made no later than the filing deadline.

The introduction of Pillar II will affect the operations of large multinational corporations operating in Poland, requiring them to adjust their tax structures and financial strategies. Key consequences include increased tax burdens for companies that previously benefited from lower tax rates abroad, changes in corporate structures for tax optimization purposes, and increased administrative costs associated with new reporting obligations.

Sanctions Under the Fiscal Penal Code

Failure to comply with the regulations regarding the submission of supplementary tax information may result in severe consequences specified in the Fiscal Penal Code. The following penalties are foreseen:

• Failure to submit information, failure to use electronic communication, or failure to meet the electronic document form requirements may result in a fine of up to 720 daily rates.
• Providing false information or withholding truth in documents is punishable by a fine of up to 480 daily rates.
• Delays in submitting required information may result in a fine of up to 180 daily rates.

In less severe cases, the offender may be penalized with a fine for a tax offense, which is a milder form of sanction.

The final step in the legislative process is the President’s signature. The new regulations are set to come into effect in January 2025. Therefore, it is advisable to analyze the impact of the proposed regulations on business operations now and begin preparing for the upcoming calculations and reporting. If you have further questions, please do not hesitate to contact us.

 

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Staniek & Partners is a law firm that provides comprehensive business advisory services in taxes, law, and accounting. Its in-house accounting office optimizes tax matters and manages clients’ accounting needs. The firm has extensive experience handling disputes with tax authorities.

The firm offers practical, clear, and solution-oriented advice tailored to the specific needs of businesses. With a team of over 30 experts, including tax advisors, legal professionals, auditors, and accountants, it takes a holistic approach to each case, thoroughly analyzing clients’ legal, tax, and accounting situations.