Overview of the Three Types of Top-up Taxes in Poland
Poland is going to implement all the three types of top-up tax:
- Global top-up tax – a tax that applies in the country where the ultimate parent entity of the group is located and results from the application of so-called Income Inclusion Rule (IIR). Tax is payable in the country of residence of the ultimate parent entity.
- Domestic minimum top-up tax – a tax that applies in the country of location of low-tax group entities, calculated as the difference between the minimum global tax rate of 15% and the effective tax rate calculated at the level of the entire jurisdiction (rather than individual entities).
- Tax on under-taxed profits (UTPR) – acting as a “back-up mechanism” in situations where the country of location of the parent company has not implemented the Pillar II legislation. Obliged to pay the tax will be the constituent companies of the group.
Qualified Domestic Minimum Top-up Tax (QDMTT) in Poland
As Poland is planning to implement a qualified domestic minimum top-up tax mechanism (QDMTT), if polish entities (together with other group entities located in Poland) reaches an effective tax rate of less than 15%, a tax obligation may arise in Poland. All the safe harbours will be implemented as well.
Reporting Obligations under the New Legislation in Poland
Reporting obligations resulting from the draft act:
- GloBE Information Return – submitted to the relevant head of the tax office for the tax year, by the end of the 15th month following the end of that tax year (for the first tax year an extended deadline of 18 months is expected). This information may be filed independently by a constituent entity or by other entity within the group designated for this purpose.
- Declaration on the amount of top-up tax due – filed by taxpayers of global top-up tax, domestic top-up tax and tax on under-taxed profits by the end of the 18th month following the end of the tax year (for the first tax year, an extended deadline of 21 months is expected). This declaration may be filed independently by a constituent entity or by designated entity located in given jurisdiction on behalf of all constituent entities in that jurisdiction.
Key Implementation Dates and Deadlines
Based on Polish regulations implementing Pillar II, the submitted information and declarations will be in a separate / independent form from the standard CIT returns.
In general, the deadline for filing the first information and declarations as well as eventual payment of tax will not be until mid-2026.
The bill is available here (in Polish).
