On 15 December 2021, the Finance Ministry (“FM”) published a communique on the tax strategy report.

By the end of this year, certain CIT taxpayers (as more specifically defined in the law, including for example groups of companies and taxpayers with revenues above EUR 50 million) must publish a report on what tax strategy they followed in 2020 and give the relevant tax authority a notice with the address of the website where they published it.

Among other things, a tax strategy report must disclose “transactions with related parties, as defined in CITA Article 11a(1)(4), whose value exceeds 5% of the balance sheet total for the purposes of accounting regulations based on most recent approved financial statements of the company, including transactions with entities that are not tax residents of the Republic of Poland”

MF previously gave no clear guidelines on how to specifically determine which related party transactions are to be disclosed in the tax strategy report. Yesterday’s communique sets out an official position of the Ministry on that matter. According to the communique (https://www.gov.pl/web/finanse/mf-przypomina-informacja-o-realizowanej-strategii-podatkowej-do-konca-grudnia-br), the 5% threshold should be applied to the sum total of all transactions with related parties during the tax year concerned.

FM writes that the way to proceed is to sum up all the related party transactions and then:

  • if the total value of the transactions does not exceed the 5% mark, the transactions are not liable to be disclosed in the tax strategy report,
  • if the total value of the transactions exceeds the 5% mark, the transactions are liable to be disclosed in the tax strategy report.

FM further explained that it is sufficient to report the total value of reportable transactions with each related party and their general character, provided that taxpayers are not required to disclose their business secrets.

Importantly, FM also confirmed that:

  • the penalty referred to in the CIT Act applies to taxpayers who fail to give the relevant tax office a notice of the website where they published their tax strategy report;
  • the penalty does not apply where a report contains errors;
  • irregularities of a tax strategy report do not qualify as a punishable act under the Fiscal Penal Code.

If these issues pertain to your business and you are interested in our assistance, please contact us.

This blog post is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.