POLAND Law and Practice Contributed by: Piotr Augustyniak, Nash Concept Ltd
regime defers taxation until profits are paid out, and qualifying income from intellectual property may be taxed at 5% under the IP Box. The family foundation has become the principal accu - mulation vehicle for private wealth: dividends, inter - est, gains on securities and rental income received by the foundation within its permitted activity bear no current tax, so that reinvestment is gross rather than net, with taxation postponed until benefits are distrib - uted. The limits of such planning are set by the general anti-avoidance rule, by mandatory disclosure of tax arrangements, and by the refusal of the Head of the National Revenue Administration to issue protective opinions where a foundation is employed primarily for a tax purpose. Structures should therefore be capa - ble of demonstrating a genuine succession or asset- protection rationale. 1.4 Pre-Immigration and Exit Planning Before Arrival Since Poland does not provide for a step-up in the tax basis of assets upon immigration, gains accrued abroad should, where practicable, be realised before residence is established. A prospective resident with substantial foreign income should consider the lump- sum regime of PLN200,000 per annum, available to persons who were not Polish residents in at least five of the six preceding tax years and who elected the regime by the end of January of the year following relocation; the regime is examined in detail in the Trends and Developments chapter. The attraction is no longer purely fiscal: Poland now stands among the 20 largest economies in the world and the sixth larg - est in the European Union, and is a conspicuously safe and comfortable country of residence. Foreign foundations, trusts and holding companies should be reviewed before arrival, as they may constitute con - trolled foreign entities of the new resident from the first Departure is constrained by the exit tax, which charg - es unrealised gains on, among other assets, shares and securities where the taxpayer was a Polish resi - dent for at least five of the ten preceding years and the aggregate value of the assets exceeds PLN4 mil - lion, at 19% (3% where no tax basis is established), day of residence. Before Departure
with payment in instalments available for moves within the EU/EEA. A feature peculiar to Poland deserves emphasis: the inheritance and donation tax attaches to Polish citizenship, so that a Polish citizen acquiring foreign assets by gift or inheritance remains within the scope of the tax even after decades of non-residence. Emigration planning must therefore address citizen - ship-based exposure, treaty residence and the timing of intended gifts as a single exercise. 1.5 Taxation of Real Estate Owned by Non- Residents and Non-Citizens Income from Polish real estate is taxable in Poland irrespective of the owner’s residence. Individuals let - ting property privately are taxed on a revenue basis at 8.5% (12.5% above PLN100,000 per annum); gains on sale are taxed at 19%, subject to the five-year exemp - tion described in 1.3 Income Tax Planning , which is equally available to non-residents. The acquisition of real estate bears a 2% transaction tax unless the sale is subject to VAT, and a higher 6% rate applies to bulk purchases of dwellings; recurrent property tax is mod - est, being calculated on surface area. For transfer tax purposes, real estate situated in Poland is within the scope of the inheritance and donation tax regardless of the citizenship or residence of the parties, while the statutory exemptions – includ - ing the immediate-family exemption – are available only where the acquirer is a citizen of Poland or of an EU or EEA state, or resides in Poland. Indirect owner - ship through a foreign company removes the succes - sion of the shares from the scope of the Polish transfer tax, but attracts income tax consequences of its own: Poland’s treaties commonly contain real-estate-rich company clauses, and a Polish real estate company is obliged, as remitter, to account for tax on the disposal of its shares by a non-resident. Structures should also anticipate reporting duties of real estate companies and the general anti-avoidance rule where interposi - tion lacks economic substance. 1.6 Stability of Tax Laws The Polish tax system has passed through a period of pronounced legislative activity: the 2022 reform pack - age altered rates, allowances and reliefs on a large scale, and was itself repeatedly revised in the course of that year. The experience has left a durable mark
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