Publication date: March 31, 2025
Legality in the light of Polish and international law
Market Principle and Transfer Pricing
According to Polish transfer pricing regulations (Articles 11a–11t of the CIT Act) and OECD guidelines, transactions between related entities must be agreed on arm’s length terms principle. If the tax authorities consider that transactions between a Polish and a Dutch company are not arm’s length, they may:
According to Article 3, paragraph 1 of the CIT Act, if a company formally registered in the Netherlands is actually managed from Poland, it may be considered a Polish tax resident. The decisive criteria:
Case law:
Judgment II FSK 2385/20 of 14 February 2023 concerns the issue of taxation of foreign companies in Poland, especially in terms of determining the place of taxation of these companies.
According to this judgment, if a foreign company does not have its registered office or management board in Poland but operates in the country (e.g. conducts business activity), it may be subject to Polish income tax (CIT) based on the rules arising from double taxation treaties.
The judgment of the Supreme Administrative Court, case files number: II FSK 29/23 of December 19, 2023, indeed concerns the issue of place of management and tax residence. In this judgment, the Supreme Administrative Court ruled on a case concerning the taxation of a company that was formally registered in another country, but its management operated in Poland, which affected the determination of its tax residence.
The judgment confirms that if most business decisions are made in Poland, such a foreign company may be subject to Polish CIT, even if it is formally registered in another country.
General Anti-Avoidance Rule (GAAR)
Under Article 119a of the Tax Ordinance, if the structure is mainly aimed at tax avoidance and has no economic justification, the tax office may question it. Since 2022, the tax office has been increasingly using GAAR (General Anti-Abuse Rule), as evidenced by tax optimization audits in the Netherlands. The tax office examines whether the companies have a real economic presence or are just shell companies.
This is also related to the planned implementation of ATAD 3, which aims to eliminate shell companies in the European Union. Poland may therefore tighten its approach to tax optimization even more.
Key elements of GAAR:
– The structure must be artificial in nature, i.e. designed primarily to obtain a tax advantage.
– It must lead to effects that are contrary to the purpose of tax law.
– It is verified whether there are other justified economic reasons for the structure.
Increased tax inspections and activities:
Pillar Two – 15% global minimum tax
From 2025, a global minimum tax of 15% will be introduced (OECD Pillar Two). Structures from the Netherlands, where the effective CIT rate may be lower, may be forced to pay additional tax in Poland (top-up tax).
What does that mean?
Influence on companies in the Netherlands
Tax haven regulations
Under Polish tax law, entities with ties to tax havens (according to the list of the Ministry of Finance and the EU list of countries not meeting tax cooperation standards) are subject to special restrictions, e.g. the obligation to report transactions (MDR) and increased tax rates for certain financial operations. In accordance with the regulation of the Minister of Finance of 18 December 2024 (Journal of Laws 2024, item 1928), companies associated with low-tax jurisdictions must prove actual economic activity in a given location to avoid their structures being treated as artificial or aimed solely at tax avoidance.
This documentation is particularly important in the context of tax exemption regulations, such as withholding tax (WHT) exemptions, and to avoid the application of the anti-avoidance rule (GAAR). If a company does not demonstrate real economic activity, the tax authorities may question its tax status and transactions may be taxed at a higher tax rate, leading to financial consequences.
Therefore, to avoid negative consequences, companies associated with such jurisdictions must ensure proper documentation and proof of actual business activity, which may include having an office, employees and actual operations in a given jurisdiction.
Beneficial Owner – a key risk in transactions with the Netherlands
A Polish company wishing to benefit from the exemption from withholding tax (WHT) must prove that the company in the Netherlands is the actual beneficiary (Beneficial Owner).
The tax office analyzes the following:
If the company does not meet the criteria of Beneficial Owner, the tax office may refuse exemption from WHT and impose 19% tax.
Summary – is CIT optimization in the Netherlands legal?
Legal Structure: If companies in the Netherlands have real offices, employees and operational activities, CIT optimization can be legal.
Companies must meet the requirements of Beneficial Owner.
Illegal Structure: If the companies are shells companies, the tax office can:
Additional risks:
– Risk of tax control – Polish and EU tax authorities are increasingly examining Dutch structures.
– Reputation risk – companies using aggressive optimization may find themselves targeted by organizations monitoring tax avoidance (e.g. Tax Justice Network).
What is the mechanism for avoiding legal tax by having in the structure of owners of a Polish company a company in the Netherlands whose main shareholder is a company in the Antilles (a tax haven).
Structure and its functioning
Operating company in Poland – conducts actual business activities (e.g. online sale of electronics), but its profits are minimized through various accounting mechanisms and intra-group transactions.
Holding company in the Netherlands (BV) – formally the owner of the Polish company, and its purpose is to transfer income to a jurisdiction with a more favorable tax system.
Antilles company – is the main shareholder of the Dutch company. Thanks to the tax haven, profits can be accumulated without taxation or with minimal taxation.
Tax optimization mechanism
Dividends and withholding tax exemption
WHT exemption under the Parent-Subsidiary Directive (2011/96/EU)
The Directive provides that dividends paid by a subsidiary (e.g. in Poland) to a parent company (e.g. in the Netherlands) may be exempt from withholding tax if the following conditions are met:
WHT rate based on UPO Poland – Netherlands
If the conditions of the Directive are not met, a double taxation treaty (DTT) applies, which provides for:
Beneficial Owner Clause
Since 2019, Poland has tightened its WHT regulations. To apply the exemption or reduced rate, the Dutch company must be the actual beneficiary of the dividend (i.e. actually have it at its disposal, and not pass it on to, for example, an entity in a tax haven). If the Polish tax authorities consider that the structure is used to avoid taxation, they may refuse the preferences.
The Dutch company then passes the profits on to the company in the Antilles, often without additional taxation (the Netherlands does not levy withholding tax on payments to third countries if the structure is properly planned).
The Netherlands uses Substance Requirements, which means that in order to avoid being accused of being a “shell company”, a Dutch holding company must demonstrate a certain minimum operational level.
License fees and management costs
The Polish company may incur high costs, e.g. license fees, consultancy or trademarks, which are paid to the company in the Netherlands or directly to the entity in the Antilles.
These costs reduce the tax base in Poland, minimizing the CIT due.
Risk and potential tax action
Polish and European tax authorities are increasingly analyzing such structures from the perspective of tax avoidance.
Possible consequences include:
New tax regulations from 2025
Global Minimum Tax (Pillar two)
From 1 January 2025, a global minimum tax of 15% was introduced for the largest capital groups, in line with the OECD initiative. The aim is to limit the shifting of profits to low-tax jurisdictions.
New reporting obligations – JPK_CIT
From 2025, Polish companies will be required to submit the Standard Audit File for CIT (JPK_CIT), which will increase the transparency of settlements and enable tax authorities to identify optimisation transactions more quickly.
Summary
This mechanism may be legal if it meets market conditions and has a real economic justification. However, if its sole purpose is tax avoidance, it may be challenged by tax authorities on the basis of the GAAR clause, beneficial owner provisions and CFC rules.
In addition, from 2025, companies must take into account new regulations, such as the global minimum tax, an updated list of tax havens and the JPK_CIT reporting obligation. Therefore, tax optimizations should be carefully analyzed and adapted to current regulations to avoid potential legal and financial consequences.
Polish Ministry of Finance – current views on such mechanisms.
The Ministry of Finance has not introduced a direct ban on the use of structures involving companies in the Netherlands and tax havens. However, tax authorities are taking action to counteract aggressive tax optimization using such structures.
Ministry of Finance warnings:
The Ministry of Finance warns against the use of aggressive tax optimization schemes using foreign companies, especially when they are formally registered abroad but actually managed from the territory of Poland. In such cases, these companies may be considered Polish tax residents, which results in the obligation to tax their income in Poland.
List of countries and territories applying harmful tax competition:
The Minister of Finance has published regulations specifying countries and territories applying harmful tax competition in income taxes PIT and CIT. The new list includes a total of 25 countries and territories. Regulations against harmful tax practices apply to jurisdictions listed in the list.
In accordance with the regulation of the Minister of Finance of 18 December 2024, the Netherlands (Netherlands) is not included in the list of countries and territories applying harmful tax competition. However, the list includes dependent territories of the Kingdom of the Netherlands, such as Sint-Maarten and Curaçao.
Anti-avoidance provision (GAAR):
Polish regulations contain a tax avoidance clause that allows tax authorities to question transactions and structures that have no real economic justification and are aimed solely at tax avoidance. In such cases, tax authorities may impose an obligation to pay overdue taxes with interest.
Although there is no direct prohibition on the use of certain structures involving companies in the Netherlands and tax havens, the Ministry of Finance and the tax authorities actively counteract aggressive tax optimization practices.
Samoa Company – comments about the jurisdiction from tax perspective
Legal basis:
Regulation of the Minister of Finance of 18 December 2024 on the list of countries and territories applying harmful tax competition in the field of corporate income tax.
Regulation of the Minister of Finance of 18 December 2024 on the list of countries and territories applying harmful tax competition in the field of personal income tax.
Samoa is considered by the Polish tax authorities as a jurisdiction applying harmful tax competition. The Minister of Finance, in the regulation of 18 December 2024, included Samoa on the list of countries and territories applying harmful tax competition in the field of income taxes PIT and CIT.
The presence of Samoa on this list means that transactions with entities registered in this jurisdiction are subject to special regulations in Poland aimed at counteracting tax avoidance. These regulations may include, among others, the obligation to apply transfer pricing mechanisms, restrictions on including expenses for such entities in tax deductible costs and the obligation to submit additional tax information.
In accordance with art. 11o of the Corporate Income Tax Act of 15 February 1992 (Journal of Laws of 2023, item 2050, hereinafter referred to as the CIT Act), Polish taxpayers entering into transactions with entities from countries applying harmful tax competition are required to prepare transfer pricing documentation, even if the transaction value does not exceed the statutory thresholds. Similar obligations apply to personal income tax payers under art. 25a of the Personal Income Tax Act of 26 July 1991 (Journal of Laws of 2023, item 1947, hereinafter referred to as the PIT Act).
Additionally, in accordance with art. 119a et seq. of the Act of 29 August 1997 – Tax Ordinance (Journal of Laws of 2023, item 2383), tax authorities may question the actual nature of transactions carried out with entities from tax havens, applying the anti-avoidance rule (GAAR).
The inclusion of Samoa in the list of countries and territories applying harmful tax competition, published by the Minister, indicates the negative perception of this jurisdiction by the Polish tax authorities in the context of tax transparency and cooperation. Despite the lack of available rulings of the Supreme Administrative Court directly concerning Samoa, the general principles regarding transactions with entities from tax havens are clearly defined in Polish law and case law. Taxpayers should exercise particular caution and diligence when documenting such transactions in order to avoid potential negative tax consequences.