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Business Centre Club Calls for Comprehensive Tax Reform in Poland

LAWBusiness Centre Club Calls for Comprehensive Tax Reform in Poland

On July 4th, at the Ministry of Finance, a meeting took place between representatives of businesses and the Minister of Finance, Andrzej Domański, during which experts from the Business Centre Club appealed to the Ministry of Finance for urgent commencement of work on a comprehensive reform of the tax system.

Among those present at the Thursday meeting were Dr. Jacek Goliszewski, President of BCC, Dr. Łukasz Bernatowicz, President of the BCC Employers’ Union, Michał Borowski, Chairman of the BCC Tax Committee and partner at Crido, as well as heads of other sectoral committees, experts, and numerous representatives of member companies.

BCC experts, led by Michał Borowski, Chairman of the BCC Tax Committee, developed 12 proposals, which they called the Great Tax Reform and presented to the Minister of Finance.

  • After more than 30 years of transformation, Poland and Polish businesses deserve a tax system that is adequate to the socio-economic position and ambitions of our country, transparent, coherent, and predictable. The BCC Tax Committee has developed 12 recommendations for such a Great Reform. This document does not include any proposals regarding expected PIT or VAT rates. It is a systemic document pointing out the structural weaknesses and inefficiencies of the current system, as well as postulates and recommendations for their resolution, and those promoting dialogue and cooperation with the tax administration. All this is to make business management, including in an increasingly complex, unstable, ambiguous, and nonlinear environment, simpler. To make decision-making, planning, and analysis processes easier and less prone to errors related to uncertain assumptions,” said Dr. Jacek Goliszewski, President of BCC.

BCC experts emphasized that a good tax system not only performs a fiscal function but is also crucial for taking risks and supporting investments by entrepreneurs, which have been at critically low levels for many years.

Michał Borowski, Chairman of the BCC Tax Committee, summarized the 12 issues included in the Great Tax Reform project.

Key BCC proposals focus on the following strategic issues:     

  • Radical reduction of reporting obligations after the introduction of JPK_CIT and KSeF

BCC proposes, among other things, the formulation of guidelines on how to report transactions recorded in auxiliary ledgers in JPK-KR files and to provide alternative solutions, such as showing transactions included in auxiliary ledgers/records collectively.

– Thorough review and harmonization of the tax relief and benefit system

BCC calls for attention to their justification, budgetary impact, scope of application, and objectives, noting that reducing point-based reliefs could also help create space for tax reduction.

– Review of the reduced VAT rate matrix and the principles of its application towards a more transparent and simpler system compliant with EU regulations

  • Thorough review of the Tax Ordinance for faster procedures and “equality of arms” in the relationship between the tax office and the taxpayer
  • Change in the supervision system over the work of National Tax Administration officials

Looking at 2024, in addition to the aforementioned tidying up of the tax system, the primary attention should be paid to the need for a genuine and permanent change in the mentality and approach of officials towards taxpayers, as well as equipping them with tools for transparent dialogue and mediation with taxpayers – even in difficult cases – and making binding decisions in this regard,” emphasized Michał Borowski, Chairman of the BCC Tax Committee.

Such a change is happening very slowly for now – and the tax office’s tactics, such as instrumentally initiating fiscal-penal proceedings, bank account freezes, or endless audits and withholding VAT refunds, certainly do not create a positive image. It is worth starting a true dialogue with entrepreneurs – both the smallest and the really large ones – to ensure that changes introduced in the tax system and the way tax law is applied contribute to the development of our economy and companies,” added BCC expert.

BCC representatives emphasize that an official should not be afraid to make decisions beneficial to the taxpayer if they are substantively justified, nor should they treat the taxpayer as a potential criminal.

BCC also called for a much broader reliance on Cooperative Compliance solutions, including the further development of the Cooperation Program.

Such long-term actions constitute a strategic direction for the sustainable development of the tax system of a modern market economy and are a form of supporting entrepreneurship by admitting new candidates to the program and popularizing its idea, emphasized Dr. Jacek Goliszewski, President of BCC.

Michał Borowski pointed out that the detailed BCC proposals included in the document submitted to the ministry concern areas of the current tax system, such as health insurance contributions, withholding tax, JPK_KR reporting, changes in the Polish Investment Zone, implementation of the EU directive on the global minimum tax, and changes in property tax, which, regardless of the tax system reform, should be taken into account to address the most urgent needs and challenges of taxpayers.

Minister Domański confirmed that the Ministry of Finance is aware that the tax system in Poland is inefficient and that it is open to dialogue with the business side. He assured that his department would organize discussions dedicated to these issues.


Key proposals focus on addressing the following strategic issues:

  1. Radical reduction of reporting obligations, especially after the introduction of JPK_CIT and KSeF
  2. Proper balance between labor taxation and capital taxation (including also para-tax obligations, fees, and contributions)
  3. Change in the supervision system over the work of National Tax Administration officials – an official should not be afraid to make decisions beneficial to the taxpayer if they are substantively justified, and should not treat the taxpayer as a potential criminal
  4. Thorough review and harmonization of the tax relief and benefit system, their justification, budgetary impact, scope of application, and objectives – reducing point-based reliefs could also help create space for tax reduction
  5. Review of the reduced VAT rate matrix and the principles of its application towards a more transparent and simpler system compliant with EU regulations
  6. Thorough review of the Tax Ordinance for faster procedures and “equality of arms” in the relationship between the tax office and the taxpayer. Much broader reliance on Cooperative Compliance solutions, such as the Cooperation Program, which long-term constitute a strategic direction for the sustainable development of the tax system of a modern market economy.

Additionally, the detailed proposals concern key areas of the current tax system, such as health insurance contributions, withholding tax, JPK_KR reporting, changes in the Polish Investment Zone, implementation of the EU directive on the global minimum tax, and changes in property tax, which, regardless of the tax system reform, should be taken into account to address the most urgent needs and challenges of taxpayers.

1. Health insurance contributions

Since 2022, new rules for calculating health insurance contributions for entrepreneurs have been introduced – the method of calculating the health insurance contribution has been linked to the chosen taxation method (progressive scale/flat rate/lump sum on recorded income).

Additionally, the possibility of deducting part (7.75%) of the paid health insurance contribution from the due tax has been eliminated (for both employees and entrepreneurs).

The introduced changes regarding health insurance contributions have significantly increased public law burdens for employees and entrepreneurs. For specialists and senior management (as higher earners), the changes have resulted in greater wage pressure from their side, directly translating into increased employer costs.

The discussed changes also introduced additional obligations for entrepreneurs, i.e., the annual settlement of health insurance contributions.


Introducing (i) a unified model for determining the basis for the health insurance contribution regardless of the tax regime chosen by the entrepreneur (e.g., in a similar form as is now the case with the lump-sum taxation method) and (ii) the possibility of deducting part or all of the paid health insurance contribution from the tax.

2. Withholding tax

Since 2022, the Pay & Refund system has been in place for withholding tax (WHT), while since 2019, regulations on the due diligence of the payer in withholding tax and the new definition of the so-called beneficial owner of payments have been in effect. The introduced regulations significantly complicate the use of preferences in withholding tax, which may result in the need to collect 19% or 20% tax on dividend payments, license fees, or interest made by Polish companies. In 2023, the Ministry of Finance presented a draft explanation on withholding tax, which additionally significantly increases doubts and lack of clarity in the application of the new regulations.

The new regulations have a significant impact on the application of WHT preferences, which translates into:

  • a very high risk of double taxation of income such as dividends, license fees, or interest;
  • lack of the possibility of a real assessment of the return on investment for the investor;
  • the perception of Poland byforeign investors as a country with a non-transparent taxation system.


  • Significant review of the draft explanations on withholding tax and development – taking into account the voice of business – of a new draft that will consider business and economic rationality aspects.
  • Amendment of regulations on withholding tax, especially regarding the definition of the beneficial owner of payments and the due diligence of the payer – in this last aspect, the creation of guidelines that will systematically allow payers to verify the expectations placed before them.

3. JPK_KR (so-called JPK_CIT)

According to Article 9, paragraph 1 of the CIT Act, “taxpayers are required to keep accounting records, in accordance with separate regulations, in a manner that ensures the determination of income (loss), the tax base, and the amount of due tax for the tax year.” Detailed rules for keeping accounting records are specified in the Accounting Act. This Act indicates the possibility of using auxiliary books for accounting purposes. Auxiliary books can be used, among other things, for recording sales, warehouse operations, and fixed asset records. In the current practice of preparing JPK-KR, taxpayers often included transactions detailed in auxiliary books collectively according to how these transactions were recorded in the main book. Such an approach for some transactions prevents the reporting of certain detailed transaction information, such as the KSeF number. Reporting entries in JPK-KR for each individual transaction recorded in auxiliary books would require changing the way double-entry bookkeeping is performed and fundamentally restructuring accounting systems that were developed based on accounting practices shaped over decades. The ability to modify accounting systems may be challenging, especially for entities operating within international capital groups or using accounting systems of foreign origin. Some information contained in auxiliary books is available in other JPK structures (JPK-FA, JPK-MAG) or, concerning fixed assets, in a separate dedicated node in the revised JPK-KR structure. Information contained in auxiliary books can also be provided at the request of the tax administration; they do not necessarily have to be an element of the JPK-KR file. Therefore, detailed reporting in the JPK-KR file of transactions recorded in auxiliary books may be an excessive technical and system burden for taxpayers. Expecting a change in the way double-entry bookkeeping is done for operations reported in auxiliary books and significantly limiting the ability to use these books in taxpayers’ accounting policies should also be assessed in terms of potential non-compliance with the Accounting Act.


We propose formulating guidelines on how to report transactions recorded in auxiliary books in JPK-KR files and providing an alternative solution to report transactions included in auxiliary books/records collectively.

The proposed regulations do not specify how to qualify and classify accounting entries for income tax settlement purposes. Whether it should be done during the current, primary accounting recording and in the accounting system, or if it is possible to update/supplement this information at a later time without the need to correct accounting entries, in a separate module for generating JPK structures. The new JPK-KR requires not only the determination of the tax qualification of transactions (taxable/non-taxable) but also their classification (types and categories in the “Settlement” node). Additionally, the tax interpretation of transactions until the submission of the tax return may change from the document’s qualification at the time of the primary accounting recording, for example, due to receiving an individual interpretation or a comprehensive analysis of complex economic events covering a series of individual accounting entries based on other sources (verification of progress in long-term contracts). As a result, the final tax qualification and classification of transactions for income tax calculation purposes are often elements of month-end or year-end closing procedures in enterprises. Reflecting the final tax calculation at the level of accounting entries may often involve a significant number of corrections to these entries, which will be labor-intensive and not always useful for the tax administration. It would be advisable to clarify that regarding the information required in the “Settlement” node, taxpayers will have the right to update the primary accounting entries for tax purposes in separate system modules or IT solutions used to prepare JPK files, not necessarily by modifying entries in the accounting system.


We propose allowing taxpayers to perform detailed tax qualification and classification of accounting entries reported in the “Settlement” node in separate system modules and formulating guidelines in this regard.

According to Article 9, paragraph 1 of the CIT Act, “taxpayers are required to keep accounting records, in accordance with separate regulations, in a manner that ensures the determination of income (loss), the tax base, and the amount of due tax for the tax year.” Detailed rules for keeping accounting records are specified in the Accounting Act. It appears that some of the requirements for the revised JPK-KR exceed the obligations provided for in the primary sources of law. Understanding the perspective of the tax administration that the scope of information in the current form of JPK-KR may not have been sufficient to conduct effective tax audits, there remains doubt as to whether some of the required information in the revised JPK-KR is indeed necessary and will find practical application in the analytical and audit activities conducted by the tax administration.


Finally, in our opinion, it is crucial to discuss with entrepreneurs the scope of reported data, their actual usefulness for the tax administration in the context of costs and burdens on the taxpayer.

4. Polish Investment Zone – project approach

The key change resulting from the provisions of the Polish Deal is the amendment of Article 17, paragraph 1, point 34a of the CIT Act (and its equivalent in the PIT Act), indicating that tax exemption will apply only to the taxpayer’s income from economic activity achieved from the implementation of a new investment specified in the support decision. A similar change appears also for Article 17, paragraph 4 of the mentioned Act, i.e., that the tax exemption referred to in paragraph 1, point 34a, applies to the taxpayer only from the income obtained from the implementation of a new investment in the area specified in the support decision. This means that literally, the tax exemption related to the implementation of a new investment will apply only to the income generated by the investor in connection with the implementation of this new investment (so-called project approach, very abstract).

The only chance to benefit from a broad scope of exemption (i.e., similar to special economic zones, meaning tax exemption for the income of the entire plant where the investment is implemented, according to the PKWiU codes of activity benefiting from support specified in the permit) is to fit into the non-transparent premises of the so-called strict connections concept indicated by the Minister of Finance, Investments and Development in the general interpretation of October 25, 2019, and developed in the tax explanations of March 6, 2020. Moreover, due to the validity of the general interpretation, the taxpayer (investor) is unable to formally confirm the fulfillment of the premises for the so-called strict connections (the Director of the National Tax Information refuses to issue individual interpretations in this regard, shifting the responsibility entirely to taxpayers, sometimes incurring hundreds of millions of PLN in investment expenditures in the country). The lack of rationality regarding the requirement to distinguish income strictly from the new investment “among” the income of the entire plant has also been confirmed in over 20 judgments by the Supreme Administrative Court (it is worth remembering that new investments are now generally modifications/“machining” within existing production lines).


Restoring the wording of Article 17, paragraph 1, point 34 and paragraph 4 of the CIT Act (and their equivalents in the PIT Act) to the state before the entry into force of the Polish Deal regulations and repealing the general interpretation of the Minister of Finance, Investments and Development of October 25, 2019.

5. The fastest possible implementation of the EU directive on the global minimum tax (i.e., Pillar II) in Poland AND ELIMINATION OF THE NATIONAL MINIMUM TAX

Poland is obliged to implement Council Directive (EU) 2022/2523 of December 14, 2022, on ensuring a global minimum level of taxation for multinational enterprise groups and large domestic groups in the Union by the end of 2023. To date, no draft of the Polish law implementing the EU directive has been created, and according to the Ministry of Finance’s announcements, the planned date for the entry into force of these regulations is 2025.

The lack of an implementing law and an appropriate equalization tax paid in Poland, which would correct the effective tax rate, thus preventing the obligation to pay the equalization tax in another country, leads to great uncertainty for businesses regarding future tax burdens. It is worth emphasizing that the lack of timely implementation of the Pillar II Directive does not exclude Poland from this mechanism. International capital groups operating in Poland will still be required to calculate the effective tax rate in Poland. If this rate does not reach the target level of 15%, it will be necessary to pay the equalization tax, but Poland will not benefit from this tax revenue. Delaying the implementation of the Pillar II Directive will thus lead to a delay in introducing the national equalization tax, consequently resulting in the loss of some revenue for Poland. For entrepreneurs, this means a number of complications related, among other things, to the risk of having to pay the tax within the group and the lack of transitional provisions.

These works should be coordinated with the elimination of the national minimum tax introduced by the previous government. The main premise of the national minimum tax is to tax those taxpayers who incur tax losses or achieve low incomes (income-to-revenue ratio not exceeding 2%). The paid minimum tax can potentially be credited towards tax calculated on general principles, provided the taxpayer’s profitability improves. It should be noted that the minimum tax was initially introduced in 202

2, but due to the fact that the then regulations could largely affect municipal enterprises, certain changes were introduced regarding its functioning. The minimum tax regulations have been fully applicable since 2024.

The introduced regulations lead to a situation where corporate income tax liability arises even for taxpayers incurring tax losses (which in itself contradicts the logic of income tax) and may particularly affect industries that, due to the nature of their activities, have a low level of profitability. For these industries, additional tax burden may lead to the desire to pass this cost onto consumers, which in turn may result in price increases and a decrease in the competitiveness of Polish enterprises. Additionally, the complexity of the minimum tax regulations will impose additional obligations on tax-accounting teams and disputes over the proper interpretation of these regulations.


The fastest possible introduction of a law implementing the directive and the introduction of an appropriate equalization tax paid in Poland, which would correct the effective tax rate within Pillar II to avoid paying the equalization tax, which Poland will not benefit from.

Elimination of the national minimum tax.


For over 25 years, no one has seriously addressed the property tax, despite it being the second-largest source of tax disputes in Poland, after VAT. This situation is not helped by the fact of decentralizing the collection system of this tax by over 2,400 tax authorities throughout Poland. For taxpayers, this means not only the necessity to submit separate declarations in each municipality where they have assets but also the need to monitor rates that differ between municipalities and sometimes even different approaches to qualifying the taxable item itself or the possibility of applying exemptions.

The discussed issue is a strategic challenge not only for taxpayers (who bear the economic burden of this tax) but also for local governments (whose income it constitutes). Therefore, the presented draft changes in this area are welcome, but it requires attention to several key substantive aspects.

The broad scope of challenges related to property tax means that their solution must be approached comprehensively.


  • amend the basic definitions that precisely define at least the taxable item, i.e., “building” and “structure” – which is required by the last two Constitutional Tribunal rulings, but also by practice. Without assessing the regulatory impact preceded by gathering and analyzing data (including the amount of revenue from taxing specific structures, not collectively), this amendment should, however, have a transitional (not revolutionary) nature; at the same time, the proposed new regulations should not additionally burden entrepreneurs but allow maintaining the status quo of the current level of taxation.
  • simplify tax declarations submitted by legal entities so that land, buildings, and structures are listed in separate annexes – this will reduce the number of documents submitted by taxpayers and make their analysis easier for local governments;
  • eliminate the need to issue annual tax decisions to individuals (a decision issued once by a local government should be valid until a new decision is delivered, e.g., after a rate change or the appearance of a new taxable item for the taxpayer);
  • clarify regulations on how to calculate the tax base for buildings. Currently, the regulations state that the base is the area measured on the inside of the walls, although practice shows that in many cases, it is necessary to measure also on other planes than walls;
  • allow local governments to participate in proceedings before administrative courts as a party in cases concerning decisions they have issued – on the one hand, this will allow local governments to defend their interests at the court level, on the other, it may accelerate proceedings conducted by local governments in property tax cases.

At the same time, it is necessary to introduce digitization to the property tax. This will streamline its collection and gather data that will finally allow its real analysis. In this aspect, the priorities are:

  • introduce the possibility of electronic filing of declarations by legal entities;
  • create a new unified declaration form;
  • develop a nationwide platform linked to the new declaration form, allowing the comprehensive collection of information on what taxpayers in different industries are taxing and how it is qualified by individual municipalities.

The effectiveness of the system also depends on designing competency support for local governments, provincial self-government appeals boards, and administrative courts regarding this tax.

Given the scale of inspections conducted by local governments in this tax (or rather their absence), support at the central level could also include analytical support in selecting cases for inspection (for which data collection – mentioned above – and then their analysis are necessary).


Tax proceedings and inspections are currently conducted in a protracted manner. Additionally, the existing regulations are often abused by tax authorities in practice.

For years, tax authorities have used procedural institutions to:

  • Instrumentally suspend/interrupt the limitation period of tax liabilities, effectively allowing audits or tax proceedings to be conducted indefinitely without their formal conclusion;
  • in cases of proceedings initiated at the taxpayer’s request, especially applications for tax interpretation, authorities focus on finding reasons to issue a decision refusing interpretation instead of substantively considering the case;
  • currently, there is also no real possibility of expediting proceedings or disciplining authorities when proceedings are conducted for many years. This is facilitated by both the lack of effective procedural solutions protecting taxpayers and the very structure of the proceedings (for example, Ministry of Finance statistics show that two-instance processing is often illusory).

Additionally, during tax proceedings, there is often a lack of dialogue with taxpayers and the use of available instruments such as administrative hearings or mediation to fully utilize conciliatory dispute resolution methods.

The proposed changes below are strategic for taxpayers as they ensure the realization of basic taxpayer rights.


Introducing so-called “quick fixes” to prevent tax proceedings from being conducted in a protracted manner, such as:

  • eliminating tax audits while introducing the possibility of making corrections during tax proceedings;
  • or, if audits are not eliminated:
    • immediate initiation of proceedings after the audit if irregularities are found during the audit (the current six-month period given to authorities to initiate proceedings is not justified, as the authority has already identified irregularities during the audit);
    • if no irregularities are found during the audit – giving the audit report a protective value for the taxpayer; strengthening the institution of reminders – introducing a short and binding deadline for its consideration or presuming the proceeding is conducted in a protracted manner if the reminder is not considered within the statutory deadline; or, if changes to the reminder institution are not introduced – removing this institution and allowing taxpayers to file a complaint for inactivity/protracted proceedings directly to the administrative court (with a binding deadline for considering the complaint);
  • introducing the possibility of waiving the second-instance review at the taxpayer’s request; the possibility of conducting remote hearings in offices and replacing classic recording with activity recordings and transcription;
  • maintaining the possibility of remote participation in hearings (at the taxpayer’s request) – introducing and adapting the system for online hearings involved significant financial investment, so returning to stationary hearings is not only impractical but also wasteful;
  • Opening the tax administration to using available instruments for conciliatory dispute resolution – especially administrative hearings provided for in the Tax Ordinance and mediation provided for in the Administrative Procedure Code;
  • the necessity of delivering a payment demand after a decision issued in the second instance instead of immediate enforcement;
  • introducing a short and binding deadline for transferring files by the administrative court to the authority after issuing a judgment annulling the decision;
  • introducing a clause of abuse of rights by authorities – as one of the fundamental principles of proceedings, which could discipline authorities and curb, among other things, the instrumental initiation of fiscal penal proceedings, unjustified imposition of immediate enforceability, issuing unjustified securing decisions, or avoiding such extreme cases of unlawful action by authorities as questioning taxpayer settlements in the absence of tax shortfalls or questioning business decisions or the adopted business model;
  • ensuring control over the process of issuing individual interpretations, in particular monitoring the reasons and cases of issuing decisions refusing interpretation.


The Cooperation Program, as a form of cooperation between large entrepreneurs and the National Tax Administration (KAS) based on mutual trust, understanding, and transparency, has been available since July 1, 2020. Currently, it operates in a pilot formula involving 20 candidates, and so far, a total of 11 companies have joined the Program.

The current catalog of benefits from participation in the program primarily includes ensuring compliance with tax regulations and certain procedural facilitation.

Signing a cooperation agreement is preceded by a preliminary KAS audit lasting from 9 months to 2 years.

Meeting the requirements for participants in the Cooperation Program often involves additional expenses and administrative burdens.

A study conducted by the Leon Kozminski Academy indicates that a significant number of entrepreneurs meeting the conditions for joining the Cooperation Program do not have sufficient knowledge about it.


  • Further development of the Cooperation Program as a form of supporting entrepreneurship by admitting new candidates to participate in it and popularizing its idea;
  • Increasing the role of tax advisors instead of auditors and statutory auditors in conducting the so-called Independent Tax Function Audits(numerous scandals involving auditors and the strictly tax-related nature of the analyses in this tool suggest that tax advisors should play a key role in conducting these works).
  • Preparing and implementing the concept of a “limited” Cooperation Program (also available to entities not achieving revenue at the level of 50 million euros per year) to promote good standards of business development frameworks;
  • Creating the possibility for corporate groups to join the Cooperation Program;
  • Expanding the catalog of benefits associated with signing a cooperation agreement.


Since 2022, entrepreneurs implementing investments in Poland worth over 100 million PLN have had the opportunity to apply for an investment agreement. This tool was intended to increase financial security and manage tax risk. This effect was to be guaranteed by the form of concluding the agreement – a contract between the entrepreneur and the Minister of Finance concluded after a comprehensive examination of all aspects relevant to determining the tax consequences of the investment. An additional benefit associated with the introduction of this tool was to increase the attractiveness of Poland as a place for investment and effectively compete with the economies of other countries in the region. In the first 22 months of the regulations, no such agreement was concluded.

Concluding an institutional agreement involves paying a high initial fee (50,000 PLN) at the application stage and the main fee (from 100,000 to 500,000 PLN). The prepared application forms for concluding an investment agreement suggest that the protection resulting from this tool can be obtained – in a similar scope – by using previously available cheaper tools. Also, the way existing applications are processed indicates that the possibilities for comprehensive examination of the case related to the consensual mode of obtaining an investment agreement are used by the Ministry of Finance only to a limited extent.

The very idea of this tool is very good and can attract foreign investors to Poland and also encourage all investors to make new investments. Unfortunately, the current attempts to conclude an investment agreement have been hampered by the lack of willingness to engage in real dialogue with entrepreneurs on complex substantive issues.


  • Changing the perception of the investment agreement as an individual interpretation (or another tool for interpreting the law) for much more money. Fully utilizing the potential of the cooperative compliance tool, assuming dialogue and enabling the analysis of all information provided by the investor, expert opinions, the possibility of directly getting to know the production processes and business activities. The Ministry of Finance should not avoid concluding investment agreements by using formal tricks or unclear interpretations.

10. Financing costs as tax-deductible costs – existing limit

Since 2018, regulations have been in place that introduce limits on the inclusion of financing costs exceeding the thresholds specified in the CIT Act as tax-deductible expenses. The threshold is calculated as 3M PLN or 30% of the so-called tax EBITDA (whichever value is higher). Financing costs exceeding this value during the tax year are excluded from the tax result. Polish regulations were introduced as the implementation of the ATAD Directive, while this directive set the limit at 3M EUR (not 3M PLN).

Although the intention behind these regulations is understandable (preventing tax avoidance by inflating financing costs), the motives for introducing cost limits significantly lower than those provided by the ATAD Directive are difficult to understand in the context of current interest rates. National regulations effectively reduce the competitiveness of Polish companies compared to their EU counterparts. Debt financing is the most popular method of raising capital by entrepreneurs and is often the simplest and quickest option for obtaining external funds.


Amending the regulations to increase the limit of financing costs that could be included as tax-deductible expenses to 3M EUR (in accordance with the ATAD Directive).

11. Changes in the appointment of administrative court judges

The selection of candidates and the evaluation of applications for appointment as an administrative court judge effectively results in a disproportionate number of judges coming from public administration, particularly the tax administration. There are very few judges with business or advisory experience, who understand the practical problems and ways of operating entrepreneurs in the tax area.

At the same time, the path to becoming a judge adjudicating tax disputes should be open (on similar terms as for legal advisers and lawyers) to tax advisers with legal education, i.e., persons with the most practical knowledge in this area.

Resolving a tax dispute often requires considering the economic realities of the industry in which the taxpayer operates. In a situation where – simplifying – most judges are former KAS officials, there is a need to strengthen the courts with individuals who have not only legal knowledge but also practical business experience.


Amending the regulations governing the judiciary to facilitate access to the judicial profession for practitioners and balancing the influx of judicial staff between public administration and business.

12. Ban on amortization of residential properties

Under the Polish Deal, since 2022, the tax deductibility of depreciation on buildings and residential premises has been excluded both in corporate income tax and personal income tax. Effectively, the costs of producing or acquiring such properties can only be recognized at the time of sale, with no possibility of making successive depreciation deductions.

In the case of personal income tax, due to simultaneously introduced changes concerning the taxation of private rental income, in practice, this change affected entrepreneurs whose income is taxed progressively or at a flat rate.

The change introduced by the Polish Deal resulted in an unjustified limitation of expenses included in the catalog of tax-deductible costs. Residential properties are a normal fixed asset, which, like any other asset, can be used in business activities. Depriving taxpayers of the right to recognize the cost of producing/acquiring residential property through depreciation deductions is a pro-fiscal solution and violates the basic principle of income tax, which is to tax the difference between revenue and the cost of obtaining it. This leads to a sudden increase in tax liabilities for taxpayers conducting such activities.

The Ministry of Finance justified that the value of residential properties increases rather than decreases, and therefore, it is not justified to grant a preference in this regard. This statement referred to the then-current situation in the real estate market and was not an economically justified argument. Especially considering the planned increase in the supply of properties, such as apartments intended for affordable rental or purchase under a 0% mortgage, a cyclical reversal of the upward trend in the residential real estate market can be expected. In such a situation, the argument of the outgoing MF management would be completely unfounded. Moreover, current regulations prevent the inclusion of costs incurred for improving properties, which are associated with increasing the initial value of a fixed asset – such expenses cannot be included as tax-deductible costs at all in the absence of depreciation.

The change introduced by the Polish Deal violated the acquired rights of taxpayers before the entry into force of these regulations due to the lack of any transitional provisions. The principle of protecting acquired rights is one of the most important principles in the Polish legal system from the perspective of citizens, derived from the constitutional principle of a democratic state governed by law and reflected in the jurisprudence of the Constitutional Tribunal. Depriving taxpayers of the possibility of depreciating residential properties, which began before 2022, constituted a violation of the Constitution of the Republic of Poland.


Amending the regulations by specifying new rules for the depreciation of residential properties, taking into account in particular the violated acquired rights of taxpayers, treating equally the purchasers of both new and used properties.

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