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28 April 2016 Global Tax Alert Poland publishes new regulation on nonresident capital gain tax on Polish securities EY Global Tax Alert Library Recently, the Polish Minister of Finance published a draft bill specifying Polish source of income rules for the corporate income tax (CIT) purposes. Access both online and pdf versions of all EY Global Tax Alerts. The proposal includes certain types of income; however the list is open-ended. The examples include income (revenue) from: Copy into your web browser: •Direct or indirect transfer of shares (stock), participation rights in partnership’s profit, investment fund certificates, in which real estate located in Poland, constitutes at least 50% of the total value of assets www.ey.com/taxalerts •Securities and derivatives listed on stock exchange market in Poland, including income (revenue) from sale or execution of rights resulting thereof If the bill is implemented as drafted, nonresident corporations trading in Polish listed securities or shares of Polish real estate rich companies, absent tax treaty protection, will be obliged to pay 19% CIT in Poland on revenue less tax base (established depending on the form of acquisition of shares/securities), beginning 1 January 2017. The current legislation lacks explicit provisions on the subject matter; though prevailing practice has confirmed that stock exchange listed shares should be subject to tax in Poland. The proposed legislation explicitly confirms this approach. 2 Global Tax Alert At the same time the new proposal does not provide specific regulations for gains on non-listed securities, therefore, although the tax authorities may still claim that they are taxable under the general CIT rules, in some cases more beneficial treatment may still be achievable (subject to case-by-case assessment). There might be further, case dependent opportunities, which allow investors to secure efficiency of their Polish investment. Future Alerts will report on legislative developments. The overall outcome of the new legislation would be that foreign investors using non-treaty locations should be prepared to register and pay tax in Poland (on capital gains as well as on dividends). For additional information with respect to this Alert, please contact the following: Ernst & Young Doradztwo Podatkowe Sp. z o.o.,Warsaw • Marcin Opilowski • Michał Koper +48 22 557 73 56 +48 22 557 70 24 Ernst & Young LLP, Polish Tax Desk, New York • Sylwia Migdal +1 212 773 0095 [email protected] [email protected] [email protected] EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. © 2016 EYGM Limited. All Rights Reserved. EYG no. 00796-161Gbl 1508-1600216 NY ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com