Introduction

Poland’s corporate tax landscape is undergoing significant changes, driven by both global initiatives and domestic reforms. Multinational corporations operating in Poland face a tax environment that is evolving to align with international standards while also embracing digitalisation and tightening enforcement on certain tax practices. These trends are shaping how large businesses plan and comply with taxes in Poland. In this article, we provide an overview of the key developments in Polish corporate taxation, explain their significance for companies (especially multinationals), and highlight what businesses should be doing to adapt. The discussion covers the implementation of the global minimum tax (Pillar Two), ongoing controversies in the withholding tax regime, the rollout of mandatory e-invoicing (KSeF), other recent notable tax changes, as well as important court rulings that are influencing tax practice in Poland.

Key Issues

Implementation of Pillar Two – global minimum tax

Poland is moving forward with implementing Pillar Two, the OECD’s global minimum tax framework. This is a part of an international effort to ensure large multinational groups pay at least a 15% effective tax rate in every jurisdiction. Poland’s adoption of these rules is happening via a new law (often referred to as the “GloBE Act” in Poland) separate from the standard Corporate Income Tax (CIT) Act. The legislation is based on the EU Directive on global minimum tax, which Poland – like all EU members – is required to transpose.

Under the rules effective from 1 January 2025, companies that are part of multinational or large domestic groups with consolidated annual revenues above EUR750 million will need to calculate their effective tax rate in Poland and possibly pay a top-up tax if that rate falls below 15%. The Pillar Two system introduces three main mechanisms to achieve this minimum taxation:

• an Income Inclusion Rule (IIR), which allows a parent company to top-up tax on profits of low-taxed subsidiaries;
• an Undertaxed Profits Rule (UTPR), which is a backstop to tax profits that were not caught by the IIR; and
• a Qualified Domestic Minimum Top-Up Tax (QDMTT), which allows Poland to collect the additional tax on low-taxed income of Polish entities itself.

Poland’s implementation has some unique aspects. Although the law formally applies from 2025, it provides an option for earlier adoption for the 2024 tax year. In practice, this means a Polish subsidiary of a multinational group can opt into the system for 2024, allowing the Polish tax authority to collect any top-up tax for that year. This optional 2024 QDMTT is designed as a safe harbour – if the Polish entity pays the minimum top-up tax for 2024, then the group’s parent company or companies in other countries will not have to apply the Pillar Two rules on that Polish income. This strategy could be beneficial for multinational groups, as it keeps the taxation (and cash outflow) in Poland rather than, say, having the parent company’s country impose the tax on Polish profits.

Pillar Two will significantly impact large businesses, requiring detailed calculations of their effective tax rate (ETR) in each jurisdiction, including Poland. If the Polish ETR falls below 15%, companies may face an additional tax charge. This will require gathering extensive financial data and potentially adjusting tax planning. The complex Polish GloBE Act demands upgrades to reporting systems and training for tax teams.

In terms of tax planning strategies, Pillar Two limits traditional tax optimisation but allows strategies on where the top-up tax is paid. In Poland, a low-taxed operation could pay a small top-up domestically to avoid a larger one abroad. Businesses should reassess tax incentives, as some may trigger a top-up tax. The Polish government is considering replacing some incentives with grants or Pillar Two qualifying subsidies, and the alignment of the “Polish Investment Zone” – a government-backed instrument to support new investment throughout Poland (which replaced the older, geographically limited special economic zones) – with Pillar Two is still under discussion.

Controversies around the Polish withholding tax regime

Poland’s withholding tax (WHT) system has been a source of complexity and controversy for multinational businesses in recent years. WHT is the tax withheld at source on certain payments to foreign entities, such as dividends, interest and royalties. While many countries have WHT, Poland introduced an unusually stringent mechanism known as “pay and refund” that has posed challenges for taxpayers and investors.

Under changes first enacted in 2019, Poland shifted from a straightforward relief-at-source system (where treaty exemptions or reductions could be applied directly when making a payment) to a pay-and-refund mechanism for large payments. After several delays, these rules finally entered into force on 1 January 2022. The core idea is that if annual payments to a single foreign recipient (being the payer’s affiliate) exceed PLN2 million (approximately EUR430,000), the Polish payer in principle must withhold tax at the full domestic rate (20% for interest/royalties, 19% for dividends) even if an exemption or treaty reduction could apply. The foreign recipient can then claim a refund of the overpaid tax from the Polish tax authorities, a process which occurs after the fact.

This system quickly became controversial. From a business perspective, it creates cash flow problems and administrative burdens. Companies making cross-border payments can end up withholding millions of zlotys, which their foreign affiliates must then reclaim. The refund process in Poland has been described as lengthy and costly. Indeed, in many cases it can take well over a year to receive a refund, and although the tax authorities claim that the process is becoming more efficient, it is still a serious burden.

Another contentious aspect of the WHT regime is the understanding of the concept of the “beneficial owner” and anti-abuse rules tied to WHT reliefs. Polish tax authorities have been aggressive in requiring that the foreign recipient not only meet formal treaty or EU Directive conditions (such as holding a certain percentage of shares for a certain period), but also that the recipient is the true beneficial owner of the income and is not just inserted into the structure to obtain a tax benefit. At the same time, the interpretation of “beneficial owner” by the tax administration has been uncertain. For example, the law explicitly requires beneficial ownership for interest and royalties (due to the EU Interest-Royalties Directive implementation), but not for EU dividend payments under the EU Parent-Subsidiary Directive (PSD). Some tax officials and lower courts contended that even EU dividends should meet a beneficial owner test or could be denied if the funds ultimately go to a tax haven investor. This created confusion for legitimate group structures and investment funds. Differing approaches by the courts (discussed in the ‘Key Cases’ section below) have only partially resolved this issue.

Poland’s Ministry of Finance has recognised the difficulties and introduced some ameliorations. Firstly, a Polish withholding agent (payer) can submit a special statement declaring that all conditions for WHT relief are met, which then allows the reduced rate or exemption to be applied without the need to withhold above the PLN2 million threshold. Additionally, Poland introduced the possibility to obtain a binding WHT opinion from the tax authorities – essentially an advance ruling that confirms the recipient’s eligibility for relief – which, if granted, allows the payer to avoid the pay-and-refund mechanism for those payments for a specified period (generally 36 months). These options, however, come with their own challenges: the due diligence needed to confidently file the declaration is substantial (with potential penalties for mistakes), and obtaining a WHT opinion can be slow and involves a fee.

Many companies report that the refund procedure, when it is needed, is still slow. In fact, a recent CJEU ruling highlighted that Poland’s practice of not paying interest on delayed WHT refunds was against EU law, suggesting systemic delays. Furthermore, determining beneficial ownership and substance has effectively shifted the burden onto Polish companies to investigate their foreign affiliates – they must gather documentation to prove that the recipient of a payment is not a mere conduit. For multinational groups, this often means proving that a finance or holding company abroad has its own business substance and decision-making, which can be a grey area.

Another ongoing challenge is navigating the frequent changes and guidance in this area. The Polish Ministry of Finance issued second draft guidance on the application of the WHT rules in late 2023, with a particular focus on the beneficial ownership test, but it is not legally binding and the Ministry is still working on revised guidance that is expected to be issued in the first half of 2025. In the meantime, in November 2024, the Ministry of Finance issued two general tax rulings clarifying the conditions under which taxpayers may apply the PSD and the Interest-Royalties Directive exemptions in Poland. The rulings emphasise that a recipient of dividends, interest or royalties should be subject to corporate tax on a worldwide basis (without an overall exemption) in its home country to qualify for relief. Interestingly, the PSD-focused ruling allows that a company’s inability to pay tax in a given year due to losses does not itself undermine the exemption, whereas the second ruling dealing with interest and royalties interprets “lack of overall tax liability” more strictly if a special tax regime effectively zeroes out the CIT burden on those categories of income.

While the above-mentioned rulings provide some guidance on applying the EU Directives, some uncertainties remain on when exactly a recipient is deemed to “benefit from an exemption” that would disqualify it from WHT relief. At the same time, taxpayers are expected to keep abreast of evolving interpretations and court decisions. All of this uncertainty increases the tax risk for companies – a small misstep in paperwork could result in the Polish tax office denying a treaty benefit and imposing the full tax, plus interest and penalties.

Given these challenges, large businesses have developed some risk mitigation strategies regarding WHT in Poland. Companies are investing in robust documentation, obtaining certificates of tax residence, representations about beneficial ownership and other documentation confirming the business substance of recipients in order to have them on file. Some are applying for WHT clearance opinions when significant or recurring payments are at stake, despite the cost and length of the process, so as to have certainty. Lastly, businesses are closely following court cases and considering litigating disputes, because the tax authorities’ stance has at times been successfully challenged in court. In summary, Poland’s WHT regime, while intended to prevent abuse, has created compliance headaches. Companies must be diligent and may need to seek professional advice to navigate this minefield of rules and ensure that cross-border payments are handled optimally under Polish law.

Mandatory e-invoicing (KSeF)

Another major development in Poland is the drive toward full e-invoicing for businesses. The National e-Invoicing System, known by its Polish abbreviation KSeF (Krajowy System e-Faktur), is a platform for issuing and reporting invoices in a structured electronic format.

Large companies with annual revenue over PLN200 million (approximately EUR46 million) will have to use KSeF from 1 February 2026, and by 1 April 2026 the e-invoicing obligation will extend to all businesses in Poland. This phased rollout gives companies additional lead time to prepare throughout 2025.

KSeF implementation, though not yet mandatory, demands substantial effort. Companies must integrate systems for XML invoice issuance, adapt processes and train staff. At the same time, it is expected that KSeF will benefit both businesses and the government. For the government, it improves VAT compliance and reduces fraud with real-time transaction data, potentially lowering audit frequency. For businesses, electronic invoices streamline processes, reduce errors and could lead to faster VAT refunds. The standardised format simplifies record-keeping and reduces data entry mistakes. In summary, the planned mandatory e-invoicing in Poland represents a significant step toward digital tax administration.

Other Important Developments

Beyond the headline issues of Pillar Two, WHT and e-invoicing, Poland has recently introduced a number of other corporate tax changes that large businesses should note. Many of these changes aim to either tighten the tax system or provide new compliance tools and incentives. Below is a summary of significant developments:

• Return of the minimum income tax: The Polish minimum income tax, which targets companies with operational losses or low-profit margins (below 2%), has been reintroduced for the 2024 financial year (to be reported in 2025). Affected companies must calculate a 10% tax on 1.5% of revenue, with certain exclusions such as start-ups and one-time events. This tax aims to curb aggressive tax planning but could also impact businesses facing financial difficulties.
• Enhanced holding company regime: Poland has improved its holding company regime, making it more attractive for international groups. From 2023, the participation exemption on capital gains was liberalised, and the holding period for shares was extended to two years. Furthermore, dividends received by a qualifying holding company are now 100% exempt (up from 95%). These changes position Poland as an attractive location for regional holding hubs, offering tax exemptions on both dividends and capital gains from subsidiaries.
• Digital reporting – JPK_CIT: Starting in 2025, large businesses (those with revenues over EUR50 million and tax capital groups) must submit their corporate income tax returns electronically in a standardised format. Smaller businesses will follow in subsequent years.
• Real estate tax changes: As of early 2025, Poland has broadened the scope of real estate taxation by modifying the definitions of “buildings” and “structures”. Companies with substantial industrial operations should review their asset lists to identify newly taxable items, as this change may have led to a significant increase in property tax bills.
• Transfer pricing simplifications: In 2023, Poland simplified its transfer pricing documentation rules, repealing the requirement to investigate indirect transactions with entities in “tax havens”. The threshold for documentation of direct transactions with such entities was raised, reducing the frequency of triggering onerous transfer pricing documentation solely based on a counterparty’s tax residence.
• Thin capitalisation rule update: Poland clarified its interest deductibility (thin cap) rules. The 2023 amendment to Poland’s thin capitalisation rules clarified that interest expenses are deductible up to PLN3 million, regardless of the 30% of EBITDA limit. This provides more certainty for companies with lower EBITDA, while larger companies will continue to rely on the 30% cap.
• Other tax incentives and changes: Poland continued to refine various tax incentives, such as adjustments to the Estonian CIT system and improvements to R&D and IP Box reliefs. Poland also introduced VAT groups, allowing related companies to simplify their VAT settlements.

In summary, the period of the last two years brought a mix of tightening and taxpayer-friendly adjustments in Polish corporate tax environment. Large businesses should review these developments carefully to ensure they are leveraging any new benefits and are compliant with new obligations.

Key Cases

Recent court decisions, both from the CJEU and from Polish administrative courts, have had a notable impact on corporate tax matters in Poland. These rulings provide clarity in some areas and highlight risks in others. Below are some of the most impactful cases:

• CJEU – Interest on Withholding Tax Refunds (Case C-322/22): In a landmark judgment on 8 June 2023, the CJEU ruled Polish tax law incompatible with EU law regarding interest on WHT refunds. Poland had denied interest if refund claims were filed more than 30 days after tax payment – an issue affecting foreign investors, particularly non-EU entities. The CJEU found this practice unlawful, confirming that taxpayers are entitled to interest on wrongfully collected WHT. This ruling allows affected companies to claim interest compensation and pressures Poland to improve refund processing. A legislative fix or faster refunds may follow to align with EU law.
• Polish Supreme Administrative Court – Beneficial Owner of Dividends (Cases II FSK 1277/22 & 1281/22): On 8 February 2023, Poland’s Supreme Administrative Court (NSA) issued important judgments regarding the WHT exemption for EU dividends. The court determined that the beneficial owner criterion does not apply to WHT exemptions for EU dividends under the PSD. Despite challenges from tax authorities concerning conduit-like recipients, the court ruled that Polish law does not require beneficial ownership for dividends, unlike for interest and royalties. These conclusions were confirmed in a more recent verdict of the NSA dated 9 October 2024 (Case II FSK 78/22).
• CJEU – Subsidiary tax liability of the management board members (case C-277/24): On 27 February 2025, the CJEU ruled that Polish regulations on the liability of board members for the tax obligations of companies are partially incompatible with EU law. The Polish rules do not allow former board members to challenge tax rulings against the company, even though they are financially responsible for the company’s liabilities. The CJEU ruled that although the exclusion of former board members from the proceedings against the company was in line with EU law, they should have the opportunity to challenge the findings of the tax decision in the proceedings against them. The CJEU ruling gives board members the right to challenge a company’s tax rulings, paving the way for the reopening of closed cases and the recovery of money.
• CJEU – CIT exemption for foreign investment funds managed internally (case C-18/23): On 27 February 2025, the CJEU ruled that the external management requirement as a condition for CIT exemption is incompatible with EU rules (under Article 63(1) of the Treaty on the Functioning of the EU) because it restricts the free movement of capital. According to the CJEU, foreign investment funds that are internally managed are therefore also exempt. The CJEU ruling means that Poland should bring its regulations into line with EU law, and until they are changed, the tax authorities should not apply the disputed condition. In practice, foreign investment funds that have so far paid CIT in Poland only because they were managed internally will have grounds to claim its refund with interest.
• Other notable decisions: Polish courts have been active on other tax fronts as well. For example, administrative courts have deliberated on the application of general anti-avoidance rules (GAAR) in corporate restructurings, on transfer pricing adjustments and on VAT issues affecting corporations. One area to highlight is the “look-through” approach in WHT: in some cases, authorities tried to look through multiple layers of transactions (for instance, if a dividend went from Poland to an EU holding, and then to a non-EU ultimate owner) and deny relief. While the NSA’s dividend decisions mentioned above reject a broad look-through for dividends, there have also been cases dealing with interest or royalty payments. Polish courts often refer to the precedent of the CJEU’s Danish cases (2019) on beneficial ownership and abuse, striking a balance between combating abuse and respecting the letter of the law. Additionally, the CJEU had other decisions indirectly relevant to Poland – for instance, cases on the VAT side, such as those concerning Polish VAT compliance measures, and Poland’s retail sales tax was cleared of EU state aid objections in 2021, which allowed that tax to be implemented.

From a big-picture view, the trend in court verdicts seems to be an increased scrutiny of Poland’s aggressive anti-avoidance measures, with courts occasionally pushing back to protect taxpayer rights (as seen in the WHT refund interest case and the dividend cases). At the same time, courts also uphold anti-abuse principles when truly sham structures are identified. For businesses, these rulings underscore the importance of staying informed about jurisprudence. Many companies operating in Poland are actively monitoring court developments or even engaging in litigation to obtain clarity on ambiguous tax issues.

Conclusion

Poland’s corporate tax regime is in a phase of dynamic change, influenced by global tax reforms, EU Directives and domestic policy priorities. For large businesses operating in Poland, the key takeaway is that proactivity and adaptation are essential.

For businesses, the key takeaways are: plan ahead, invest in compliance (especially IT systems and knowledgeable personnel) and utilise the available tax planning opportunities that remain (such as the holding company regime or various reliefs) in a responsible manner. Engaging with tax advisers and perhaps the tax authorities (for rulings or clarification) can be prudent given the pace of change. Poland remains an attractive market with a generally stable general 19% CIT rate (and preferential 9% rate for the so-called small taxpayers) and incentives for investment, but the framework around that CIT is becoming more complex. By understanding the trends and developments outlined above, companies can better navigate the Polish tax environment and turn compliance into a strategic advantage, minimising surprises and ensuring smooth operations in 2025 and beyond.