CIT and PIT improvement – limited partnership company as a CIT taxpayer

Sept. 8, 2020 Poland

Limited partnerships are to become CIT taxpayers. This means that automatic compensation of income of one limited partnership with the loss incurred by another one at the level of partners of these entities will no longer be possible. Such structures will not be tax-effective anymore. This is the moment to consider other possibilities, to include the so-called Estonian CIT regime to be implemented as of 2021. And possibly Alternative Investments Funds in other cases. Other changes are the following:

  • Increasing the threshold of revenues from EUR 1,2 million to EUR 2 million in order to take advantage of the reduced 9% CIT rate.
  • Limiting the possibility of settling losses when the taxpayer takes over another entity or makes an in-kind contribution in the form of enterprise or organized part of the enterprise (OPE) or cash contribution in exchange for which the taxpayer acquires enterprise or OPE.
  • Taxation of upon winding-up of a company.
  • Clarification of provisions concerning limitation of debt financing costs.
  • Limitation on the possibility of adjusting the depreciation rate in a situation in which the taxpayer benefits from CIT exemption.
  • Transfer of obligation of the settlement of tax on the sale of shares in real estate companies from the seller to the real estate company. 
  • Introducing obligation to prepare and publish tax policy for the tax year by CIT taxpayer.
  • Increased transfer pricing documentation for transactions with an entity registered in the so-called tax haven.
  • Possibility to benefit from an exemption from minimum tax (currently in force until December 31, 2020), if the epidemic state continues in Poland after December 31, 2020.

The planned changes in PIT include additionally:

  • Liquidation of abolition relief (which generally ends the exemption method of avoidance of double taxation with respect to individuals).
  • Extending the possibility to extend lump sum through increasing thresholds. 

The planned date of the draft adoption is the third quarter of 2020. We will inform you about the further stages of work on the draft.

In case of any questions, please contact our tax experts:

Łukasz Bączyk
Head of Tax, Board Member

Marta Skrodzka
Tax Manager - Tax Adviser