Publication date: May 09, 2025
Alternative Investment Company (AIC) is a commercial law entity that functions as a significant element of the investment market in the Polish legal system. Introduced by the Polish Act on Investment Funds and the Management of Alternative Investment Funds, AIC enables flexible capital management and the creation of investment structures that meet the needs of private and institutional investors. In recent years, with the dynamic development of the capital market and the growing interest in alternative investments, AICs have also gained importance in the context of tax planning, including the use of specific tax reliefs. The text below presents the functioning of AICs, the principles of investing funds, the possibilities of using tax relief, related accounting aspects and practical examples for investors.
What is an Alternative Investment Company (AIC) – definition and legal basis
An alternative investment company is a form of a collective investment institution, regulated primarily in the Act of 27 May 2004 on investment funds and the management of alternative investment funds. AIC is not an investment fund in the classical sense, but a legal form that allows for the accumulation of capital from investors and investing it in accordance with the adopted strategy.
The Act provides for the obligation to register AIC in the register maintained by the Polish Financial Supervision Authority (KNF) and to meet certain organizational and capital conditions.
AIC can operate in various legal forms – as a limited liability company, joint-stock company, European company, limited partnership, or limited joint-stock partnership, in which the sole general partner is a limited liability company, joint-stock company or European company. Each of these forms offers different tax and organizational possibilities, and their selection depends on the planned model of operation, number of investors, type of investment and level of risk. The main objective of AIC activity is to invest financial resources in various assets, including primarily enterprises, real estate, infrastructure projects, and other alternative investment instruments. The nature of the investment can be very different – from investments in start-ups (venture capital), through private equity, to real estate or debt instruments.
Unlike traditional investment funds, AICs offer greater flexibility of operation and the possibility of making investments with a higher risk profile, which makes them attractive, among others, for venture capital funds (A specific formula for conducting investment activities, which involves investing in projects at an early stage of development. These are therefore investments in companies that are characterized by a high level of risk, but also the potential to generate high profits in the future). Thanks to AICs, it is possible to invest in entities at an early stage of development, real estate, infrastructure projects or new technologies. In practice, Alternative Investment Companies are often investment vehicles created for the needs of a specific undertaking (e.g. investment in a startup or purchase of shares in a non-public company).
In the context of relief for investors in alternative investment companies, it is worth recalling the idea of venture capital. Venture Capital are closed-end funds, the activity of which consists in a group of investors (a dozen or so at most) allocating money for investments of a specific type – uncertain, but capable of generating high rates of return. Most often, this method of financing investments concerns illiquid companies (not listed on the stock exchange), from which one cannot exit overnight, but has to wait until the company has fully developed. Sticking strictly to the American model, it should be mentioned that venture capital funds invest in new ventures, based on advanced technologies (high-tech), which raise great hopes for profit, but are associated with high investment risk. However, in Poland, venture capital funds are usually the domain of companies that have a good product and have already achieved market success, supported by rapid growth in recent years, and which lack capital for faster development and increasing production capacity, gaining new market niches or developing a sales network [P. Tarnowicz, P. Rot [in:] Venture Capital Funds in Poland. Informator, ed. A. Łankowski, Warsaw 2002, p. 6)].
The provisions on tax relief for investors in Alternative Investment Company in Poland are contained in:
article 26hc. of the Personal Income Tax Act [Relief for investors in alternative investment companies]On this basis, the taxpayer may deduct from the tax base an amount constituting 50% of the expenses incurred for the acquisition of shares (stocks) in an Alternative Investment Company or a capital company in which the alternative investment company holds at least 5% of the shares (stocks), or will hold at least 5% of the shares (stocks) as a result of acquiring or taking up shares (stocks) in that company within 90 days from the date of acquisition or taking up shares (stocks) in the capital company by the taxpayer.
Additionally:
• shares must be held for at least 24 months;
• the maximum amount of relief is 50% of the value of expenses, not more than PLN 250,000 per year;
• Alternative Investment Company must be registered in Poland and meet the requirements of the Investment Funds Act.
The relief applies only to individuals and is optional. It is worth noting that the relief does not affect the method of taxation of any gains from the sale of shares – these are still subject to capital gains tax.
In practice, many aspects of the application of the relief are subject to interpretation by tax authorities. Individual interpretations issued are an important source of interpretation of the regulations. In particular, the distinction between the acquisition of new shares (qualifying for the relief) and the purchase of existing shares – which does not generate the relief – is of key importance.
Alternative Investment Company – R&D relief and IP Box relief
Alternative Investment Companies investing in innovative technological ventures may directly or indirectly benefit from tax preferences in the form of R&D relief and IP Box relief. Although AICs themselves rarely conduct R&D directly, investing in companies conducting such activities may result in tax optimization for both portfolio companies and – indirectly – AIC investors.
R&D relief and the activities of Alternative Investment Company portfolio companies R&D relief, provided for in Article 26e of the Personal Income Tax Act and Article 18d of the Corporate Income Tax Act, allows taxpayers to deduct from their tax base the eligible costs of research and development activities, such as the remuneration of employees involved in R&D, depreciation of laboratory equipment or materials used in development work.
Alternative Investment Company portfolio companies involved in implementing innovative solutions often qualify for the R&D tax relief. This can increase the profitability of their operations and positively affect the valuation of shares held by AIC. Indirectly, therefore, investors in AIC can benefit from tax preferences available to investment entities in which funds are invested.
IP Box Relief – preferential taxation of income from intellectual property rights IP Box Relief (Innovation Box) allows for taxation of income from commercialization of qualified intellectual property rights (e.g. patents, computer programs) at a preferential rate of 5% CIT or PIT. This applies to income from license fees, sales of IP rights, as well as products and services that include qualified IP.
In practice, many AIC-funded technology companies develop software, obtain patents or other forms of IP protection, which allows them to benefit from the IP Box relief. This increases their profitability and investment potential, which can be particularly attractive from the perspective of an investor looking for long-term value growth.
Accounting and reporting obligations of AIC
An Alternative Investment Company, regardless of its legal form, is subject to the obligations arising from the Act of 29 September 1994 on Accounting. In particular:
• Investment records – AIC is obliged to maintain full accounting records, taking into account the regulations on financial instruments, including the valuation of shares in portfolio companies.
• Financial report – AIC must prepare an annual financial report, subject to mandatory audit by a certified auditor.
In practice, many investors use the services of specialized accounting offices or law firms that provide services to AIC-type entities, which helps reduce the risk of formal errors.
Examples of Individual Interpretations related to tax relief in AIC.
Individual interpretation of October 18, 2024 (0113-KDIPT1-2.4012.608.2024.2.KT). The Director of the National Tax Information considered the Applicant’s position to be correct regarding the exemption from VAT of services provided to the internally managed Alternative Investment Company. The Applicant runs a sole proprietorship and concluded a cooperation agreement with AIC. He provides services to it, including making investment decisions, supporting strategic decision-making, participating in negotiations, building relationships with investors and preparing investment analyses and reports. AIC, as an entity entered into the register maintained by the Polish Financial Supervision Authority, independently manages itself as a fund. The services provided by the Applicant are key and necessary for the investment process and fund management – they are not advisory in nature, but constitute actual management, which confirms, among other things, his responsibility for investment processes. The remuneration is a lump sum and applies to all services covered by the agreement. Since these services constitute investment fund management within the meaning of Article 43, Section 1, Item 12, Letters a and b of the VAT Act, they benefit from VAT exemption. Tax authorities consistently emphasize that the relief is available only in the case of taking up new shares, and not the purchase of existing shares from other partners. This distinction can be a source of misunderstandings and should be analyzed each time in the context of a specific transaction.
Risks, limitations and the future of AIC
Alternative investment companies, despite their many advantages, also have their dark side and several issues that require clarification. Investors pay attention to, among others:
• Interpretation risk – inconsistent positions of the National Tax Administration regarding the qualification of a given investment as the acquisition of new shares. Before investing, it is worth considering an application for an individual interpretation.
• Documentation risk – lack of appropriate resolutions, transfer confirmations or share subscription agreements may result in questioning the right to tax relief during an audit.
• The need to clarify the regulations – especially in terms of the definition of “new shares” and the relationship between relief and investments by related entities.
• A demand for a broader application of the relief – including for legal persons or entities reinvesting profits.
The issue of potential legislative changes that could limit the scope of application of the relief or tighten documentation conditions is also being raised more and more often.
Example scenarios for the use of AIC by the investor.
Startup by AIC – the investor establishes AIC [limited liability company], acquires new shares for PLN 200,000. After 2 years – even without profit – he can obtain a relief of PLN 100,000 from the tax base.
Investment through an associated company – an investment through an associated entity does not formally exclude relief, but may lead to disputes with the National Tax Administration and requires detailed justification.
Exiting the investment after 18 months results in the withdrawal of the relief and the obligation to pay additional tax along with interest.
In each case, documentation, compliance with appropriate deadlines and ongoing verification of legal conditions are crucial.
An alternative investment company is a modern investment tool that, if the appropriate conditions are met, enables the use of tax preferences provided for in Article 26hc. of the Personal Income Tax Act. Potential benefits, such as a relief of up to PLN 250,000 per year, are, however, accompanied by significant formal obligations and risks, failure to comply with which may result in the loss of the right to preferences.
For investors and legal advisors, knowledge of regulations, case law, tax authorities’ positions and reliable transaction documentation are of key importance. Proper preparation and risk analysis can make AIC an effective tool in investment strategy.