Author: kancelaria

Polish Investment Zone Reform 2026

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Draft amendments to the Act on Supporting New Investments – what foreign investors should know

 

Legislative status – as of June 2026

This guide discusses a draft amendment to the Polish Act on Supporting New Investments. Its assumptions have been entered in the Government’s List of Legislative and Programme Work, and the proposed direction was presented publicly in June 2026. These are proposed, not binding, rules.

The final shape of the legislation – and indeed whether it enters into force at all – depends on the course of the legislative process. Until the act is promulgated in the Journal of Laws, the current legal framework described below remains in force.

Why this matters for foreign investors

For an inbound investor, the Polish Investment Zone (PSI) is the single most important tax incentive in the country: a corporate or personal income tax exemption granted by a so-called decision on support, in exchange for carrying out a qualifying investment of a defined value and creating a declared number of jobs. Unlike the earlier special economic zone (SEZ) model, the PSI exemption is available across the entire territory of Poland rather than within demarcated areas only.

In June 2026 the government outlined a broad amendment to the regime. Three features make it directly relevant to capital allocation decisions. First, the maximum period of the support decision is to be extended, lengthening the horizon over which the exemption can be used. Second, that extension interacts with the global minimum tax, potentially preserving the real value of the incentive for multinational groups. Third, a new mandatory tax-authority opinion will apply to the largest projects, adding a procedural step that must be planned for. The remainder of this guide explains the current regime, then walks through what is set to change.

The PSI in brief – the regime as it stands

Support for a new investment is granted, under Article 3 of the Act on Supporting New Investments of 10 May 2018 (consolidated text: Journal of Laws of 2023, item 74, as amended), in the form of an income tax exemption. For corporate taxpayers the legal basis is Article 17(1)(34a) of the CIT Act; for individuals carrying on business activity, Article 21(1)(63b) of the PIT Act. The exemption covers income from the business activity specified in the support decision, carried out within the area indicated in that decision, up to the ceiling of available State aid.

Support decisions are issued, on behalf of the minister responsible for the economy, by the area manager – historically the companies managing the special economic zones. Today a decision runs for ten, twelve or fifteen years, depending on the regional aid intensity applicable to the location. The amount of aid is calculated as the product of the maximum aid intensity for the region and either the eligible costs of the new investment or the two-year labour costs of newly employed staff.

The instrument has a strong track record. Between September 2018 and 31 December 2025, roughly 3,700 support decisions were issued, covering a declared investment value of around PLN 154.4 billion and close to 55,570 new jobs. Polish small and medium-sized enterprises accounted for about 72 percent of the projects, confirming that the regime reaches well beyond large multinationals.

What the draft changes

Extension of the support-decision period and the global minimum tax

The most consequential proposal is to extend the maximum period of a support decision to twenty years, against the current ceiling of fifteen. A longer horizon increases certainty across the full life cycle of an investment and helps absorb capital outlays in long-payback projects typical of manufacturing and logistics.

The extension carries particular weight under the OECD Pillar Two global minimum tax (the top-up tax, implemented in part through the QDMTT mechanism). The structure of that levy can mean that benefiting from PSI-style exemptions triggers a top-up tax payable outside Poland by international groups. Spreading the same support over a longer period lowers its annual intensity and may therefore soften the top-up effect, helping to preserve the real value of the incentive for groups within scope of minimum taxation. For multinational investors, this is the change most likely to alter the post-tax economics of a Polish project.

A mandatory opinion from the Head of the National Revenue Administration

A genuinely new feature is an opinion issued by the Head of the National Revenue Administration (KAS) on a new investment. The opinion is to address the subject matter of the business activity connected with the investment and the area where it is to be carried out, to the extent these bear on the scope of the tax exemption. Under the assumptions, the opinion will be mandatory where the maximum permissible amount of State aid for an investor is to exceed PLN 25 million.

The mechanism strengthens fiscal oversight before a decision is issued and, in the drafters’ intention, gives the taxpayer certainty as to how the exempt activity and its location will be understood. In practice it adds a procedural stage to large projects. Investors should build this step into their timelines and ensure that the description of the activity and the investment area is consistent across the application, the project documentation and the transfer pricing policy – consistency that matters most where the Polish entity performs functions for related parties within a group.

Express treatment of reinvestments

The draft expressly confirms the right to exempt income generated by the expansion of existing plants – so-called reinvestments. The eligibility of reinvestments has, to date, raised interpretive doubts, even though reinvestments feature in roughly 70 percent of the support decisions issued. A statutory confirmation materially improves the tax certainty of businesses scaling capacity within facilities that are already operating.

Digitalisation through the ePSI platform

The draft provides for an Electronic Platform of the Polish Investment Zone, operating under the working name ePSI. It is to allow applications, correspondence with the authority and the issuing, amendment and expiry of decisions to be handled electronically. The system is also expected to verify simple formal errors automatically – a frequent cause of delay to date – and to support monitoring of the effects of granted support. For investors running parallel projects across several locations, the resulting standardisation of documentary requirements is a practical benefit.

A new definition of the employment level

The draft introduces a new definition of the employment level. To date the concept has been read – including in the case law of the Supreme Administrative Court – not only as a headcount but also in temporal terms, as an average workforce maintained over a given period. The proposed provision is to state unambiguously that the employment level is the number of employees engaged at the establishment where the new investment is located. The change simplifies verification of the commitments under a support decision, but obliges investors to revisit how they declare and monitor employment, particularly in multi-site structures and where flexible forms of engagement are used.

Defining the area manager after the zones expire

The reform is prompted by the expiry of the Special Economic Zones Act of 20 October 1994, which ceases to have effect on 31 December 2026. On that date the existing area managers would lose their legal basis to act. The draft adds an autonomous definition of the area manager to the Act on Supporting New Investments and transfers to it the competences to service investors and to issue, amend and monitor support decisions – securing institutional continuity for investors after the zones are wound down.

Foreign investor considerations

On balance, the proposed changes are favourable to inbound investors. The longer decision period and its link to the global minimum tax address one of the principal tax risks faced by multinational groups using Polish incentives, while digitalisation and the express treatment of reinvestments improve the predictability of the investment process.

At the same time, the mandatory KAS opinion for projects with aid exceeding PLN 25 million means that the largest foreign investments will undergo additional, prior scrutiny by the revenue administration. This step should be reflected in project timelines, and the description of the activity and investment area should be coherent across all documentation. Investors should also recall that zone-exempt income is subject to separate accounting from other preferences – including the R&D relief and the IP Box – requiring careful segregation of the costs and revenues of exempt and taxable activity. The reform does not change this principle; it tidies the regulatory environment in which it operates.

Current regime versus proposed rules – at a glance

The table below contrasts the key elements of the instrument as it stands with the shape suggested by the draft assumptions. The right-hand column should be read subject to its non-binding, draft character.

Area Current regime Proposed rule
Application process Paper / mixed, fragmented Electronic ePSI platform, automated error checks
Support-decision period 10, 12 or 15 years Extended up to 20 years
Global minimum tax No mitigation of effect Longer period lowers annual aid intensity
Employment level Headcount-and-time reading (case law) Headcount at the investment establishment
Fiscal oversight No prior KAS opinion Mandatory KAS opinion where aid > PLN 25m
Reinvestments Eligibility uncertain Right to exemption stated expressly
Area manager Based on the SEZ Act Autonomous definition in the WNI Act

Timeline and entry into force

Under the assumptions, the draft is to be adopted by the Council of Ministers in the second or third quarter of 2026. Allowing for the usual course of the legislative process, the tax measures could apply to income tax settlements for periods beginning on or after 1 January 2027, while non-tax elements – including the operational aspects of the ePSI platform and the provisions regularising the status of area managers – could enter into force earlier.

These are projections based on published assumptions. The full text of the draft, its final wording and the effective dates of individual measures remain dependent on further legislative work. Investors planning to apply for support decisions in 2026 should monitor the progress of the work and factor in the possibility that the rules change while a procedure is pending.

Conclusions and practical recommendations

The proposed PSI reform points in an investor-friendly direction: it digitalises and accelerates the procedure, lengthens the horizon of the exemption, eases the tension between zone aid and the global minimum tax, and removes a significant interpretive doubt around reinvestments. In parallel, it introduces a new oversight stage in the form of the mandatory KAS opinion for the largest projects.

Investors holding a support decision, or planning new projects, should already assess the impact of the proposed changes on their strategy – in particular the time horizon of the investment, the way employment is declared, and the consistency of the documentation that determines the scope of the exemption. Decisions to commence or pause application proceedings in 2026 are best taken in light of the current state of legislative work, with the risk of change in mind. Given the draft character of the measures discussed, we recommend verifying the legal position immediately before any investment decision.

Editorial note

This guide reflects the amendment assumptions known as of June 2026 and deliberately omits details whose wording has not yet been finalised – including the precise scope of transitional rules for decisions issued before the reform takes effect, the technical parameters of the ePSI platform, and any regional differentiation of the maximum decision period.

It also does not cover the detailed rules for calculating the State aid ceiling, the regional aid intensity applicable in individual voivodeships, or the interaction between the zone exemption and the R&D relief and IP Box, all of which call for separate, case-specific analysis. For specific matters, please contact us.

ABOUT ATL LAW

ATL Law is a law firm specialising in comprehensive support for foreign investors in the Polish market. We provide multilingual advice (Polish, English and German) in tax, corporate, transfer pricing and employment law.

We advise on obtaining and settling support decisions under the Polish Investment Zone, on combining the zone exemption with the R&D relief and the IP Box, and in proceedings before the tax authorities. We support clients at every stage of entering the Polish market – from selecting the optimal legal structure, through ongoing compliance, to representation in proceedings.

www.atl-law.pl   |   office@atl-law.pl

Polish Shareholders’ Agreement (SHA)

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Key Investor Protection Clauses

A Guide for Entrepreneurs and Foreign Investors | ATL Law 2026

The SHA as the Cornerstone of an Investment Transaction

A shareholders’ agreement – commonly referred to as an SHA or Investment Agreement – is one of the most consequential legal documents governing the relationship between an investor and the founders or other shareholders of a company. Unlike the articles of association (umowa spółki), which are registered with the National Court Register (KRS) and therefore publicly accessible, the SHA is a confidential document containing detailed arrangements regarding rights, obligations and protective mechanisms that the parties wish to keep outside the public domain.

For an investor – whether a venture capital fund, a strategic acquirer or a high-net-worth individual investing in a start-up or a mature company – the terms of the SHA ultimately determine the scope of the investor’s control over the business, the protection of the invested capital and the available exit pathways. Carefully negotiated protective clauses can mean the difference between a successful exit and capital being locked in a business whose trajectory has diverged from the original investment thesis.

This article examines the key clauses of a SHA from an investor’s perspective, with specific reference to Polish law – in particular the provisions of the Polish Commercial Companies Code (Kodeks spółek handlowych, KSH) governing limited liability companies (sp. z o.o.) and joint-stock companies (SA). Although the SHA is a contractual instrument, its effectiveness in a Polish context depends on proper alignment with the articles of association or statutes of the company, and in certain cases requires direct incorporation into those corporate documents.

Representations and Warranties – The Foundation of Transaction Security

Representations and warranties clauses form one of the cornerstones of any investment agreement. Their purpose is to provide the investor with assurances from the selling shareholders or the company regarding the accuracy of key information about the business in which the investor is placing capital.

Scope of Warranties

In investment transactions involving Polish companies, a standard warranty package should cover at a minimum: the validity and completeness of the company’s corporate documents and the absence of any formal defects in its incorporation; the accuracy of the ownership structure and the absence of third-party rights over shares; the reliability of the financial statements prepared in accordance with Polish Accounting Standards or IFRS; the absence of pending or threatened litigation, administrative proceedings or tax proceedings that could materially affect the company’s financial position; the correctness of tax filings and the absence of arrears towards the tax authorities and the Social Insurance Institution (ZUS); and the company’s compliance with applicable law, including sector-specific regulatory requirements.

Survival Period and Claims Mechanism

A key negotiating point is the period during which the investor may pursue claims for breach of warranties (survival period), as well as the minimum and maximum thresholds of the seller’s liability. In Polish transactional practice, a multi-year claims period is typically agreed, with the period for tax warranties often corresponding to the statute of limitations for tax liabilities. This is particularly significant given that Polish tax authorities can challenge corporate tax positions several years after the relevant filings, creating ongoing exposure for the acquirer.

The claims mechanism should precisely define the notice requirements for a claim (form, content, deadline), the procedure for handling claims between the parties, and the dispute resolution framework. Well-drafted provisions in this area eliminate the risk of a claim lapsing due to procedural non-compliance.

Anti-Dilution Protections – Preserving the Investor’s Stake

Anti-dilution mechanisms are designed to protect the investor against a reduction in its percentage ownership of the company following the issuance of new shares, and – in the case of a down-round – against an economic dilution of the value of the investor’s stake.

Full Ratchet and Broad-Based Weighted Average

The most stringent form of anti-dilution protection is the full ratchet mechanism, which entitles the investor to adjust the subscription price of its shares to match the issuance price of the new round – irrespective of the number of newly issued shares. Given its potentially adverse consequences for founders and other shareholders, this mechanism is increasingly rarely accepted in deal negotiations.

A far more common solution is weighted average anti-dilution, and in particular the broad-based variant, which includes all shares (including options and other convertible instruments) in the denominator of the formula, rather than only the shares already issued. This mechanism provides a more balanced protection for the investor while minimising the negative impact on the company’s cap table.

Implementation in Polish Companies

In Polish limited liability companies, anti-dilution mechanisms require precise implementation at the level of the articles of association, as the KSH does not expressly provide for anti-dilution rights for individual shareholders. In practice, they are implemented through pre-emptive rights to subscribe for shares in a new issuance (right of first offer), financial preferential treatment of the investor’s shares, or conversion or adjustment clauses modifying the number of shares held by the investor.

Liquidation Preference – Priority Return of Capital

Liquidation preference is one of the most important rights enjoyed by an institutional investor, conferring priority in the distribution of proceeds generated by a liquidation event. The concept of a liquidation event is typically defined broadly – encompassing not only actual liquidation of the company, but also the sale of a controlling stake, a merger, a consolidation or the sale of all or substantially all of the company’s assets.

Non-Participating vs Participating Models

Under the non-participating model, the investor is entitled to a return of invested capital (sometimes augmented by a specified preferred return), following which the remaining proceeds are distributed proportionately among the other shareholders. The participating model grants the investor the right to both the preferential return and a pro-rata share in the distribution of the residual proceeds – which can result in disproportionately high payouts to the investor.

A common compromise in Polish VC/PE transactions is the participating with cap model, limiting the aggregate distributions to the investor to a specified multiple of invested capital.

Liquidation Events and Polish Law

From a Polish law perspective, the implementation of liquidation preference requires a coordinated approach at both the SHA and articles of association levels. In a sp. z o.o., the distribution of profits and liquidation proceeds is governed by the KSH, and departures from the principle of proportionality are only permissible within the limits expressly permitted by statute. It is therefore advisable that liquidation preference clauses be mirrored in the relevant provisions of the articles of association governing the preferential rights attaching to the investor’s shares.

Pre-emption and First-Refusal Rights – Controlling Ownership Structure

Provisions governing the transfer of shares are a fundamental element of any SHA. Their purpose is to ensure that existing shareholders – and in particular the investor – retain the ability to determine who enters the ownership structure of the company.

Right of First Refusal (ROFR)

A right of first refusal obliges a shareholder intending to sell its shares to offer them first to the existing shareholders (or the company) on terms no less favourable than those proposed by a prospective third-party buyer. This mechanism protects existing shareholders against an unwanted change in the ownership structure, giving them priority over third parties.

Right of First Offer (ROFO)

The right of first offer is a weaker form of protection – the selling shareholder is only required to offer the shares to existing shareholders before entering into negotiations with third parties. In practice, ROFO is more favourable to the seller, as it does not require disclosure of the terms of the third-party offer.

Transfer Restrictions – Lock-Up

The SHA should specify a minimum period during which founders and key employees are not permitted to transfer their shares (lock-up period). Lock-up clauses are designed to ensure management stability in the critical post-investment period and are particularly important in VC transactions, where the value of the company is substantially determined by the skills and commitment of its founders.

Tag-Along and Drag-Along – Rights on a Change of Ownership

Tag-Along Rights

A tag-along clause entitles a minority investor to participate in a share sale transaction initiated by a majority shareholder, on the same financial terms. This mechanism protects the minority shareholder against a scenario in which the majority shareholder sells its stake at an attractive price, leaving the minority investor without the ability to exit the investment on equivalent terms.

The scope of the tag-along clause requires precise definition of the percentage threshold of shares being sold that activates the right (trigger threshold), the mechanism for pro-rata allocation of the offer between the seller and the investor, and the legal consequences in the event the acquiring party refuses to include the investor’s shares in the transaction.

Drag-Along Rights

A drag-along clause entitles a majority shareholder (or a coalition of shareholders) to require the remaining shareholders to sell their shares on the same terms as their own, in the context of a whole-company sale transaction. This mechanism facilitates a clean exit and eliminates the risk of minority shareholders blocking the transaction.

Investor protection in the context of drag-along involves negotiating appropriate activation conditions – a minimum sale price (floor price), a minimum ownership threshold required to activate the drag-along right, and an assurance that the obligation to sell cannot be activated by the founders without the investor’s consent if it does not provide the investor with a minimum return on investment.

Information and Corporate Rights

Effective investor protection requires not only appropriate mechanisms at the exit stage, but also ongoing access to information necessary for monitoring the company’s financial and operational performance. Information rights therefore constitute an integral component of any SHA.

Financial Information Rights

The SHA should provide the investor with access to monthly and quarterly financial reports, annual financial statements audited by a statutory auditor, the annual budget and multi-year financial plans, reports on key performance indicators, and any material information relating to events affecting the company’s financial or legal position. It is advisable to reserve the right to conduct an independent audit by an auditor designated by the investor, particularly where there are grounds for concern about the accuracy of the information being provided.

Corporate Governance Rights

Alongside information rights, the SHA should address the investor’s rights in the governance of the company. Key elements include: the right to nominate or block nominations to the management board or supervisory board, veto rights over the most significant corporate decisions (reserved matters), the right to attend meetings of the company’s bodies, and the right to approve all related-party transactions.

The list of reserved matters requiring the investor’s consent is one of the key negotiating points. It typically covers: amendments to the articles of association or statutes, issuance of new shares, incurring financial liabilities above a specified threshold, disposal or encumbrance of key assets, changes to the remuneration of senior management, acquisitions and investments, and dividend distributions.

Exit Mechanisms

The exit strategy is one of the fundamental elements negotiated in any SHA. Institutional investors operating within defined investment horizons seek to guarantee mechanisms that will allow them to realise a return on their investment within a predictable timeframe and on acceptable terms.

Put Option and Redemption Right

A put option grants the investor the right to require the company or the remaining shareholders to repurchase its shares after a specified period or upon the occurrence of specified conditions (for example, failure by the company to achieve agreed financial milestones or failure to complete a public offering within the agreed timeframe). This mechanism provides protection against the investor being locked into an investment without a realistic exit pathway.

Registration Rights

In the case of joint-stock companies or companies planning a stock exchange listing, the SHA should contain registration rights provisions obliging the company or majority shareholders to ensure that the investor can sell its shares in the context of a public or secondary offering. The two principal types are demand registration rights (the right to require a public offering) and piggyback registration rights (the right to join an offering initiated by the company or other shareholders).

IPO and SPAC Clauses

Companies at an advanced stage of growth may agree in the SHA to an obligation to complete an initial public offering (IPO) or a SPAC transaction within a specified period, as one of the exit mechanisms for investors. Such clauses should specify a minimum company valuation as a precondition for the IPO, the consequences of failure to complete the IPO within the agreed timeframe, and the investor’s rights in the event of cancellation or delay of the planned transaction.

Founder-Related Provisions – Protecting the Investor’s Interests

Founder Share Vesting

The vesting mechanism makes the founders’ full acquisition of rights to their shares conditional upon their continued involvement in the company for a specified period (time-based vesting) or the achievement by the company of specified milestones (milestone-based vesting). These clauses protect the investor against a scenario in which a key founder leaves the company shortly after the investment, retaining their full shareholding.

A typical vesting schedule provides for a four-year vesting period with a one-year cliff, meaning that no shares vest during the first year, and upon completion of that first year, 25% of the unvested shares vest in a single tranche.

Good Leaver and Bad Leaver

The SHA should precisely define the consequences of a founder’s departure from the company depending on the circumstances. Departure in good circumstances (good leaver – for example, due to illness or other legitimate reasons) typically entitles the departing founder to retain their shares or have them repurchased at fair market value. Departure in bad circumstances (bad leaver – for example, as a result of a serious breach of duties or action to the detriment of the company) may result in forfeiture of unvested shares or their repurchase at nominal value.

Non-Compete and Non-Solicitation Clauses

Investment agreements invariably include non-compete and non-solicitation of clients and employees clauses imposed on founders and key management. Under Polish law, such restrictions must be precisely limited in terms of scope, territory and duration in order not to violate the principles of good faith and social coexistence and to avoid a risk of invalidity. Experience in Polish transactions indicates that non-compete clauses that are drafted with an excessively broad scope or duration are vulnerable to challenge in Polish courts.

 

Perspective of Foreign Investors

Foreign investors committing capital to Polish companies face a number of legal issues that require particular attention when drafting the SHA. The first concerns the choice of governing law. While the principle of freedom of contract in private international law permits the SHA to be governed by foreign law, the application of the Polish KSH and Civil Code as the regulatory backdrop for transactions involving Polish companies is unavoidable in practice.

This is particularly significant with respect to SHA provisions that must be implemented at the level of the company’s articles of association or statutes – those documents are governed exclusively by Polish law. In other words, the SHA may be drafted using Anglo-American templates and subjected to English or Delaware law, but its provisions will only bind the company and its bodies to the extent they are reflected in the company’s corporate documents governed by Polish law.

Tax considerations constitute a second area requiring careful attention. The structure of the investment determines its tax treatment both in Poland and in the investor’s home jurisdiction. Investment structures using holding companies located in treaty jurisdictions, combined with appropriate debt instruments and dividend preference arrangements, can significantly reduce the effective tax burden on exit proceeds.

Conclusions and Practical Recommendations

An investment agreement is a document in which detail is of fundamental importance. An investor who neglects precision in drafting protective clauses exposes itself to unpredictable risk when the events those clauses were designed to address actually materialise.

The most important practical recommendations are: precise definition of the scope and content of warranties and the mechanism for pursuing claims for their breach; careful design of anti-dilution mechanisms and liquidation preferences in a manner that accommodates the constraints of Polish company law; ensuring alignment of the SHA provisions with the company’s articles of association so that the rights arising under the SHA are enforceable against the company’s bodies; negotiating a broad list of reserved matters that gives the investor genuine control over key strategic decisions; and planning exit mechanisms at the point of investment entry, so that the scenarios for concluding the investment are anticipated and contractually governed.

Effective implementation of the above solutions requires the engagement of legal counsel with experience in both venture capital and private equity transactions and Polish company law. The combination of these competencies enables the drafting of SHA documentation that fully achieves the parties’ objectives within the Polish legal framework.

ABOUT ATL LAW

ATL Law is a law firm specialising in comprehensive legal services for foreign investors in Poland. We offer multilingual advice in the areas of corporate law, tax law, M&A transactions, venture capital and private equity. We have extensive experience in negotiating and structuring SHA investment agreements and providing integrated legal and tax advice on investment transactions in the Polish market.

www.atl-law.pl  |  office@atl-law.pl

Successful Defence of Board Members in Corporate Liability Dispute

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🏆 Successful Defence of Board Members in Corporate Liability Dispute

Another significant victory for our Firm. We secured a full dismissal of claims seeking to hold our clients — members of a company’s management board — personally liable for the company’s outstanding obligations, fully protecting their private assets.

We represented members of the management board of a commercial company in complex litigation initiated by creditors seeking to satisfy their claims directly from our clients’ personal assets. The legal basis for the claims was rooted in Polish corporate law governing the subsidiary personal liability of board members for a company’s obligations — in particular Article 299 of the Commercial Companies Code — as well as insolvency regulations concerning the timeliness of filing for bankruptcy.

The case was multifaceted and required simultaneous analysis across several dimensions: an assessment of the company’s financial condition in the period preceding insolvency, a verification of the appropriateness and timeliness of the board’s actions, and an examination of whether statutory exculpatory grounds existed to exclude personal liability.

As part of our litigation strategy, we conducted a thorough review of the company’s financial and corporate documentation spanning several years of its operations. We demonstrated that the board had continuously monitored the company’s financial standing, taken reasonable restructuring measures, and — critically — had filed for bankruptcy within the statutory deadline. The body of evidence assembled, including an expert opinion from a certified accountant, effectively dismantled the claimants’ argument that the board had acted negligently and to the detriment of creditors.

The court accepted our arguments in full and dismissed the claims entirely. Our clients avoided personal liability for the company’s obligations, preserving the integrity of their private assets. The judgment reaffirms that effective defence in such cases demands not only a thorough command of the law, but also the ability to navigate the intersection of corporate law, insolvency proceedings, and corporate finance.

⚖️ Facing a similar challenge?

Whether you are a foreign investor, a board member of a Polish entity, or a company navigating financial difficulty — understanding the scope of personal liability exposure under Polish law is essential. Our Firm provides comprehensive legal counsel at every stage: from early-stage risk assessment and structuring, through representation in court proceedings, to the robust protection of your personal and business interests.

We work regularly with international clients and are fully equipped to advise in English across all areas of Polish corporate, commercial, and insolvency law.

📩 Get in touch — we are here to help.

The PIP (NLI) Reform And B2B Reclassification Risk

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What the administrative decision means from 8 July 2026

A guide for employers and foreign investors hiring in Poland | ATL Law 2026

Introduction – a new chapter in employment-form supervision

The Act of 11 March 2026 amending the Act on the National Labour Inspectorate (Państwowa Inspekcja Pracy, PIP) and certain other acts – signed by the President on 2 April 2026 and published in the Journal of Laws on 7 April 2026 – introduces one of the most significant changes to the supervision of lawful employment in Poland in recent years. The core provisions enter into force on 8 July 2026, after a three-month vacatio legis. For businesses engaging contractors in Poland under B2B and other civil-law arrangements, this is the deadline by which organisations should prepare for substantially strengthened inspection powers.

Two layers must be distinguished. The reform does not prohibit B2B cooperation or other civil-law forms, and it does not change the statutory definition of an employment relationship. What it changes is enforcement – moving the point at which the nature of a working arrangement is decided away from lengthy court proceedings and towards the administrative inspection stage. For foreign investors, who frequently build operating models on flexible forms of cooperation, this means scrutinising not so much the wording of contracts as the way they are actually performed.

The core of the reform – an administrative decision, not only the courts

What remains unchanged – the substantive employment test

The reform does not touch Article 22 § 1 of the Labour Code, which has long provided the substantive test. Under that provision, work of a defined type performed for an employer, under the employer’s direction and at a place and time designated by the employer, for remuneration, constitutes an employment relationship regardless of how the parties have named their contract. Classification therefore turns on the actual content and manner of cooperation, not on the formal legal label. The test itself is not new – what is new is the procedure by which an authority may apply it.

The new power of the district labour inspector

Until now, establishing the existence of an employment relationship was in practice the domain of the labour courts, and proceedings often took years. The reform empowers the district labour inspector to establish the existence of an employment relationship by way of an administrative decision where the conditions of cooperation correspond to the features of employment, irrespective of the formal legal basis – and therefore also in relation to B2B contracts and contracts of mandate or for specific work. This creates an administrative “fast track” while preserving full judicial review of the decision.

A two-stage procedure – an order first, a decision only after

Unlike earlier drafts, the enacted model does not provide for automatic reclassification at the stage of inspection findings. The procedure is two-stage, which creates genuine room to correct a cooperation model.

  • Stage one – the order: the inspector first issues an order to remedy the irregularities identified, for example by changing the form of cooperation or eliminating the features of an employment relationship from the way the work is actually performed.
  • Stage two – the decision: only failure to comply with the order, or improper compliance, opens the way for the district labour inspector to issue a decision establishing the existence of an employment relationship. Independently of this route, the inspector retains the option of referring the matter to court.

The two-stage structure matters in practice: the first formal signal from the inspectorate is not yet a ruling but a call to act. Using that window for a genuine correction of the model allows a reclassification decision to be avoided.

The temporal effect of the decision – ex nunc and enforceability

One of the most important features of the enacted Act is the temporal scope of the decision’s effects. A district labour inspector’s decision establishing an employment relationship produces legal, tax and social-insurance effects from the date it is issued (ex nunc), not retroactively. The administrative decision alone therefore does not convert the cooperation backwards over its entire duration.

The decision becomes enforceable upon expiry of the appeal deadline or upon a final court judgment. The Act allows immediate enforceability to be ordered in defined cases, in particular where the decision concerns a person subject to special protection. Crucially, obtaining retroactive effects – covering the whole period during which the parties were bound by the contract – requires the district labour inspector to bring a separate court action to establish the existence of an employment relationship. The court route thus remains the only mechanism leading to retroactive effects within the employment relationship itself.

Protective standards where the terms cannot be determined

Where the circumstances do not allow the inspector to determine individual elements of the employment relationship, the Act provides for so-called protective standards. In that case an indefinite-term, full-time contract is presumed, with the place of work at the employer’s registered seat. The date of conclusion of the employment contract is taken to be the date of the decision, or in defined cases the date the inspection began. This construction shifts the practical risk of documentary ambiguity onto the engaging entity.

Appeal to the labour court and security granted ex officio

A district labour inspector’s decision does not close off the party’s ability to defend its position. An appeal lies to the labour court and must be filed within one month of the date the decision is issued. Until the case is finally concluded, enforcement of the decision is in principle suspended, save for cases covered by immediate enforceability.

At the same time, the reform strengthens the position of the person affected by reclassification. Where an appeal is filed, the court will as a rule grant security ex officio, limiting the engaging entity’s ability to amend or terminate the contract during the proceedings. The court may refuse security only where it is obvious, in the circumstances of the case, that the contract at issue is not an employment contract. In practice this means that even a successful challenge requires litigation during which the employer’s flexibility in managing the relationship is materially constrained.

Independent ZUS and tax-authority risk – a five-year horizon

Limiting the effect of the PIP decision itself to the future does not eliminate backward-looking financial risk. The Social Insurance Institution (ZUS) and the National Revenue Administration (KAS) act under their own competences and, independently of the inspector’s ruling, may pursue overdue contributions and taxes for up to five years back. A reclassification by PIP – like the inspection findings themselves – may serve these authorities as a trigger to open their own proceedings.

Under Article 38a of the Act on the Social Insurance System, contributions previously paid by a sole trader or contractor are credited against the amounts due. However, the difference between contributions calculated on the minimum base (typical for sole traders) and those due on full remuneration remains the engaging entity’s liability, increased by interest. For long-running, highly priced B2B cooperation, the accumulated arrears per individual can reach substantial figures, which often makes the ZUS and KAS exposure more significant financially than the inspector’s decision itself.

Twelve months for voluntary correction – the amnesty mechanism

The Act provides for a twelve-month period from the entry into force of the provisions, during which entities that voluntarily convert civil-law contracts into employment contracts are released from liability for prior irregularities in that respect. This mechanism is a genuine incentive to put cooperation models in order before the first inspection. It should be stressed, however, that the protective period concerns liability towards the labour inspectorate and does not eliminate the independent claims of ZUS and the tax authorities for overdue contributions and taxes. Voluntary correction reduces the risk of sanctions but does not automatically relieve the entity of financial arrears.

The individual interpretation as a safeguarding tool

Modelled on tax rulings, the reform introduces a new instrument – the ability to apply to the Chief Labour Inspector for an individual interpretation assessing a form of cooperation. The application fee is nominal. The interpretation is intended to confirm whether a given cooperation model gives grounds for a reclassification decision, and compliance with it protects against sanctions from the labour inspectorate.

The instrument should be used with awareness of its limits. The interpretation is not binding on the engaging entity and relates solely to the facts described in the application. For businesses built on numerous B2B contracts, an unfavourable interpretation may in turn increase exposure to inspection and force a costly change of model. A decision to apply should therefore be preceded by an internal audit and risk analysis.

Higher sanctions and inter-institutional cooperation

Alongside the reclassification decision, the reform raises the penalties for concluding civil-law contracts in conditions characteristic of an employment relationship. The upper limit of the fine rises from the previous PLN 30,000 to a materially higher level, and the inspector may impose a penalty by way of a fine notice. Equally important in practice is the strengthening of inter-institutional cooperation.

The reform provides for systematic data exchange between the Social Insurance Institution, the National Labour Inspectorate and the National Revenue Administration, including the use of IT systems for risk analysis and the targeting of entities for inspection. It also establishes an inter-institutional team comprising the Chief Labour Inspector, the President of ZUS and the Head of KAS, tasked with coordinating action and identifying areas of heightened risk. In practice this means that contribution and tax data may become a source for selecting targets of labour inspections.

The foreign investor’s perspective

For a foreign investor who employs or plans to employ in Poland, the reform has several practical consequences. Models built on B2B contracts – common in IT, construction and the creative-services sector – remain particularly exposed to inspection. In capital groups where a Polish company cooperates with individual contractors performing work organised by the company, correct contract wording alone ceases to be sufficient – what decides is the actual operating practice and its consistency with the declared legal basis.

Consequently, legal due diligence on market entry, or on the acquisition of a B2B-based company, should cover not only the content of the contracts but also the actual manner of cooperation: the contractors’ degree of independence, the economic risk they bear, the scope of organisational subordination, and the consistency of documentation with practice. Because the assessment is distributed across several authorities – PIP, ZUS and KAS – the risk must be analysed cumulatively rather than through the lens of the labour inspectorate alone.

How to prepare your company before 8 July 2026

The reform does not require abandoning the B2B model where it reflects genuine contractor independence. The sensible response is not an automatic shift to employment contracts, but a thorough audit of cooperation models carried out before the new provisions begin to apply. The table below indicates the signals on which inspecting authorities focus when assessing the nature of a working arrangement.

 

Signals of employee subordination (reclassification risk) Features of genuine B2B independence (lower risk)
Fixed working hours and attendance set by the principal Contractor independently sets working time and organisation
Work solely at the principal’s premises and on its equipment Genuine freedom as to the place and tools of performance
Ongoing instructions and direct supervision by a manager Settlement by result, without day-to-day direction
Fixed monthly pay irrespective of result and free of risk Economic risk and responsibility for the result borne by the contractor
A single recipient of services and a ban on serving others Ability to provide services to multiple clients
“Actual” cooperation inconsistent with the contract wording Documentation consistent with the real operating practice

 

In practice, preparing the organisation should involve reviewing existing contracts and mandates for features of subordination, verifying that contract wording is consistent with how cooperation is actually performed, putting documentation in order and – where the line is thin – considering a voluntary correction of the model within the twelve-month protective window. For borderline models, applying for an individual interpretation is worth considering.

Conclusion

The reform of the National Labour Inspectorate does not create a new basis of liability; it radically changes how long-standing rules are enforced. From 8 July 2026, the burden of deciding the nature of a working arrangement shifts from lengthy court proceedings to a faster administrative inspection stage, while judicial review is preserved and the decision operates only prospectively. The greatest financial risk, however, remains with the independent proceedings of ZUS and KAS, which may reach five years back.

For employers and foreign investors, the key is to use the period before the provisions take effect for a thorough audit of cooperation models and for putting documentation and operating practice in order. The civil-law cooperation that remains safe is the one that is not only correctly designed but also ready to be defended from the first day of an inspection.

ABOUT ATL LAW

ATL Law is a law firm specialising in comprehensive support for foreign investors on the Polish market. We provide multilingual advice (Polish, English, German) in employment law, tax law, corporate law and compliance. We advise on the design and audit of B2B and civil-law cooperation models against reclassification risk, and we represent clients in inspection proceedings before the National Labour Inspectorate and in proceedings before ZUS and the National Revenue Administration. We help employers prepare their organisations for the reform that takes effect on 8 July 2026.

Off-Cycle Financial Statements in Poland: What Foreign Investors Should Know After the 2026 KSR Clarification

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If you own – or are considering buying – a Polish company, there is a quirk of Polish accounting law that may catch you off guard: certain corporate events force your company to prepare a full financial statement in the middle of the fiscal year, separate from its regular annual accounts. This applies to transactions you may take for granted in your home jurisdiction, such as paying an interim dividend or restructuring your holding.

For years, the legal and accounting community in Poland disagreed about what exactly these mid-year statements were – whether they needed to be audited, what comparative data they should contain, and how they related to the annual financial report. In February 2026, the Polish Accounting Standards Committee (Komitet Standardów Rachunkowości, “KSR”) issued a binding clarification that finally settles most of these questions.

This article explains what changed, why it matters for your Polish operation, and where you still need to be cautious.

When Your Polish Company Will Need One of These Statements

A mid-year (“special”) balance sheet date arises whenever the company closes its books on a date other than the end of its fiscal year. The most common triggers from a foreign investor’s perspective are:

  • Corporate conversions – for example, converting a limited liability company (spółka z o.o.) into a joint-stock company (spółka akcyjna), or restructuring a partnership into a corporate form. Polish company law requires a financial statement as part of the conversion plan.
  • Mergers and demergers – both domestic and cross-border. The financial statement underpins the merger plan and the related shareholder resolutions.
  • Interim dividend payments by a joint-stock company – paying an interim dividend in a Polish spółka akcyjna requires a financial statement supporting the distribution.
  • Entering the “Estonian CIT” regime – a popular alternative corporate tax system in Poland that taxes only distributed profits. Switching to it requires closing the books on the day before entry.
  • Other statutory events specific to particular industries or transactions.

If any of these are on your roadmap for your Polish subsidiary, expect to encounter a special balance sheet date.

The Core Insight: This Is Not Your Annual Report

The single most important takeaway from the KSR clarification is this: a financial statement prepared on a special balance sheet date is not an annual financial statement, and the fiscal year does not end on that date.

In practical terms, this means three things:

First, your company still has to prepare its regular annual financial statement at the end of its fiscal year, exactly as before. The mid-year statement does not replace it – the two coexist.

Second, the fiscal year keeps running. Even though the books are formally closed on the special date and reopened the day after, this is an accounting mechanic, not a calendar event. The fiscal year continues until its scheduled end.

Third, the regulatory treatment is much lighter than for the annual report – which is good news for your cost base and timeline.

The Practical Consequences: Lighter Compliance

Because the mid-year statement is not an annual one, several burdensome requirements do not apply by default:

  • No mandatory statutory audit. Unlike the annual financial statement (which must be audited for companies above certain thresholds), the mid-year statement does not need an auditor’s opinion, unless a specific provision says so.
  • No board approval by shareholders’ resolution. The shareholders do not need to formally approve it the way they approve the annual report.
  • No management report. The narrative document covering business activity, risks, and outlook is required only for annual statements.
  • No payments-to-governments report. The extractive-industries disclosure obligation is tied to the fiscal year, not to any mid-year close.

For a foreign investor managing several Polish entities, this matters. Each annual audit cycle costs time and external fees; the KSR clarification confirms that a transaction-driven mid-year close does not automatically multiply that burden.

Watch-Outs: When the Lighter Regime Does Not Apply

The “no audit needed” rule has meaningful exceptions. Before assuming you can skip the auditor, check whether any of the following applies:

  1. Interim dividend in a joint-stock company. Polish company law requires that the financial statement supporting the interim distribution be reviewed – this is precisely the kind of “special provision” that overrides the default.
  2. M&A operations. Merger plans, demerger plans, and conversion plans typically require a statutory auditor’s opinion under Polish company law. The financial statements supporting those plans are tightly coupled to that audit process.
  3. Public companies and regulated sectors. Listed issuers, banks, insurance undertakings, and other regulated financial institutions face additional reporting and review obligations under sector-specific rules and capital-markets regulations.
  4. Industry-specific statutes may impose their own audit or disclosure requirements that survive the general rule.

A clean way to think about it: the default is “light”, but transactional context can quickly re-introduce a full audit requirement.

What Has To Be in the Statement

The KSR clarification also resolves a subtle but consequential question – what comparative data the mid-year statement should contain. The answer matters because incomplete comparatives undermine the document’s usefulness to lenders, counterparties, and tax authorities. The structure is now:

  • Balance sheet – current data as of the special date, with prior-year data as of the end of the previous fiscal year.
  • Profit & loss statement – from the start of the current fiscal year to the special date, with the corresponding period of the previous fiscal year for comparison.
  • Cash flow statement – same logic as P&L.
  • Statement of changes in equity – current data from the start of the fiscal year to the special date, with the entire previous fiscal year as the comparative.

If preparing full comparatives is genuinely impractical (for example, where source data is not available in the required granularity), the standard allows an alternative – but the company must explain the deviation in the notes. This is not a discretionary shortcut; expect auditors and tax authorities to test the justification if invoked.

After the Special Date: Your Next Annual Report Still Covers the Full Year

Because the fiscal year does not end on the special balance sheet date, the next annual financial statement covers the entire fiscal year – not just the period after the special date. The comparative period is the previous full fiscal year, as usual.

The KSR clarification recommends that the notes to that annual report identify the event that triggered the special balance sheet date (for example, the conversion or merger), and provide partial-year data where this helps users of the statement – particularly when the fiscal year spans two tax years or involves a settlement among shareholders.

A Critical Tax Caveat: Accounting Year ≠ Tax Year

Foreign investors frequently assume that closing the books mid-year also closes the tax year. It does not – not automatically, and not as a matter of accounting law.

The Polish corporate income tax statute defines the tax year separately. By default, it is the calendar year, but taxpayers can elect a different tax year aligned with their fiscal year. A mid-year accounting close does not end the tax year unless a specific tax rule says so. The clearest examples where the two align are:

  • Transfer pricing documentation – obligations track the tax year, which usually matches the fiscal year.
  • Estonian CIT entry and exit – the tax statute itself requires book closure on specific dates.

The KSR explicitly disclaims any interpretation of tax law in its clarification. This is not a technicality – it is a warning that the tax consequences of a mid-year close need a separate analysis, ideally before the corporate event is finalized.

The Unresolved Question: Changing the Fiscal Year During a Conversion

One area remains genuinely unsettled. Under Polish accounting law, when a company changes its fiscal year, the first year after the change must be longer than 12 months. But it is not clear whether this rule applies when the fiscal year is changed in connection with a corporate conversion – or whether “the first year after the change” means the year beginning after the change or the year ending after the change.

For investors planning to combine a conversion with a fiscal-year alignment (a common request when integrating a Polish target into a foreign group’s reporting calendar), this ambiguity can result in inconsistent reporting periods spanning up to two years. The KSR did not resolve this – which means it has to be planned for, transaction by transaction, until either the legislature or the courts settle it.

How ATL Law Supports Foreign Investors

At ATL Law, we routinely advise foreign investors and international groups on Polish corporate operations that trigger special balance sheet dates – conversions, mergers, demergers, dividend planning, and entry into the Estonian CIT regime. Our work in this area typically covers:

  • Transaction structuring that anticipates the accounting and tax mechanics, not just the corporate-law steps;
  • Drafting of conversion, merger, and demerger plans in compliance with the Polish Commercial Companies Code (KSH), including coordination with statutory auditors;
  • Tax opinions on the consequences of mid-year book closures, including the interplay with Estonian CIT and transfer pricing;
  • Cross-border coordination with parent-company auditors and finance teams to ensure that the Polish entity’s reporting integrates cleanly with group accounts;
  • Interim dividend planning for Polish joint-stock companies, including compliance with the supporting-statement requirements.

The 2026 KSR clarification removes much of the uncertainty that used to surround mid-year financial statements in Poland – which should make planning easier and timelines more predictable. The areas that remain ambiguous, particularly around fiscal-year changes during conversions, are exactly where experienced local counsel adds the most value.

Beneficial Owner Won’t Save Your Polish Holding Structure

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If you hold a Polish company through a foreign holding entity — Dutch, Cypriot, Luxembourg, Maltese — there is a recent Polish court ruling you should understand. Not because it changes the law dramatically, but because it tells you exactly where the Polish tax authorities will now attack. And the answer is not where most investors expect.

The short version

For years, the central fight over Poland’s dividend withholding tax exemption was about one phrase: “beneficial owner.” The Polish tax authorities argued that a foreign holding company could only enjoy the exemption if it was the real owner of the dividend — not just a conduit passing money up the chain.

A regional administrative court in Gdańsk has now confirmed, in line with a growing series of Supreme Administrative Court rulings, that this argument is wrong: beneficial-owner status is not a condition for Poland’s dividend exemption. Good news for taxpayers — except the same court still denied the exemption. It simply used a different tool to do it.

That tool is the anti-abuse clause. And for foreign investors, that shift is the whole story.

How Poland’s dividend exemption works (and where the trap is)

When a Polish company pays a dividend to a foreign shareholder, the default is a 19% withholding tax. Under the EU Parent-Subsidiary Directive — implemented in Polish law — that tax can drop to zero if certain conditions are met (minimum shareholding, holding period, EU/EEA parent, and so on).

Here is the distinction the court made clear, and it matters:

  • For interest and royalties, Polish law explicitly requires the recipient to be the beneficial owner.
  • For dividends, the law contains no such requirement.

The court’s reasoning is simple: if the legislator deliberately wrote the beneficial-owner test into one exemption and left it out of the other, tax authorities cannot read it back into the dividend rules. So if your structure was challenged purely on “your holding company isn’t the real owner,” you now have a strong defense.

But that defense only gets you to the real battlefield — which is substance.

The case, in plain terms

The facts are a textbook cross-border holding chain:

Polish operating companies → Dutch holding company → Cypriot company (managed from Malta) → two Polish-resident individuals.

In 2018, the Polish company paid out a dividend to the Dutch holding company and applied the 0% exemption. The tax authorities investigated — using information exchange with the Dutch, Cypriot, and Maltese tax administrations — and found something that, frankly, is common in these structures.

The Dutch holding company had no employees, no office, no real estate, and no genuine business. Its income was almost entirely dividends from Poland. Its only “investment” was parking the cash in a bank account. The Cypriot company one level up looked exactly the same.

Then came the number that decided the case. Over 2017–2018, the Dutch entity received more than PLN 32 million in dividends from Poland — and only about 13% of it ever reached the actual individuals at the top of the chain. More than 87% simply sat at the holding-company level, never reinvested, never distributed onward.

To the court, that wasn’t a holding structure. It was a parking lot for cash, built to convert a 19% tax into 0%.

The anti-abuse clause: the real test

This is the part every investor should internalize. The court found that the exemption could be denied under the small anti-abuse clause (Poland’s implementation of the directive’s anti-abuse rule). That clause switches off the exemption when both of these are true:

  1. A main purpose of the arrangement was to obtain the tax exemption — and the benefit went beyond simply avoiding double taxation; and
  2. The arrangement is artificial — not done for genuine economic reasons.

The court found both. The intermediate companies did no real business; their only function was to channel dividends with minimal tax. One detail made it worse: the Dutch company appeared in the structure shortly after the exemption was introduced — a timing pattern that tax authorities read as deliberate.

The court also leaned on the EU’s well-known “Danish cases” (C-116/16 and C-117/16): an EU member state must refuse a directive benefit when the conditions are met only on paper and the real aim is to game the system.

“But the money was eventually taxed in the EU” — why that didn’t work

The taxpayer made an argument that sounds compelling: the ultimate recipients were Polish residents who did pay tax in Poland, so the exemption simply prevented double taxation — exactly what the directive intends. This is the “look-through” approach: ignore the empty shells and look at who really ends up with the money.

The court’s response is the practical lesson of the entire ruling. It accepted that the authorities had effectively already looked through the structure — and found no one worth looking through to. The look-through approach only helps when there is a real beneficial owner somewhere in the chain. Here, the Cypriot company at the top was also a shell, and only a small fraction of the money was ever taxed in Poland.

Bottom line: “it was taxed somewhere in the EU” does not rescue a structure once the anti-abuse clause applies. Artificiality anywhere in the chain neutralizes the directive’s protection — no matter where the final recipient lives.

The hidden risk: the statute of limitations barely protects you

There is one more point that rarely makes the headlines but should worry any investor relying on “enough time has passed.”

This case concerns a 2018 dividend, yet it is still being litigated in 2026. How? Because Polish authorities have two independent ways to freeze the limitation clock in cross-border cases:

  • Information exchange with foreign tax administrations. Because the authorities had to query the Netherlands, Cyprus, and Malta, the clock was suspended for the entire period from the first request (October 2022) to the last reply from Malta (January 2025).
  • Opening a fiscal-criminal investigation (here, over an allegedly false withholding-tax return), which independently suspends the clock.

These work in parallel. Even if a court strikes one down, the other can keep the tax liability alive. The practical takeaway: in cross-border holding structures, the comfortable assumption that “the standard five-year period has run out” is often an illusion. Successive queries to several countries can suspend the clock for years.

What this means for you

If you hold Polish assets through a foreign company, here is how to read this ruling:

  • Stop relying on the beneficial-owner debate. It’s largely settled in the taxpayer’s favor for dividends — but that’s no longer where you win or lose.
  • The decisive question is substance. Polish authorities now build their case on whether your foreign holding company actually does anything: people, premises, decisions, reinvestment, genuine business purpose.
  • A pure conduit is the highest-risk profile. Empty company, dividend-only income, no reinvestment, only a fraction passed onward, and incorporation timed to a tax change — that’s the exact pattern that loses.
  • “Taxed elsewhere in the EU” is not a shield if the structure is artificial.
  • Don’t trust the calendar. Cross-border structures stay exposed far longer than the nominal limitation period suggests.

The right question to ask is no longer “Do we tick the boxes for the exemption?” It is “Does each company in our chain run a real business we could prove to an auditor?”

If you can’t answer that confidently, the time to review is now — before the tax authority does it for you.

How ATL Law can help

At ATL Law, we advise Polish and international investors on cross-border tax structuring, holding company arrangements, and disputes with the Polish tax authorities. This ruling confirms that the safety of a structure is now decided on economic substance and evidence, not formal conditions alone. We help clients:

  • audit the economic substance of their foreign holding entities against Poland’s anti-abuse standard;
  • assess and de-risk existing cross-border structures and redesign them safely;
  • represent clients in tax and administrative-court proceedings, including withholding-tax and information-exchange cases;
  • advise on ongoing flows — dividends, royalties, and interest — across borders.

If you hold Polish assets through a foreign structure, talk to us — we’ll help you find out whether your structure would survive scrutiny, before it’s tested.

Dr Zuzanna Jęcek Receives the “Doctorate OPEN MIND” Award

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We are pleased to announce that Dr Zuzanna Jęcek, a member of our team has been awarded the “Doctorate OPEN MIND” prize in the 2nd edition of the COOPERANTE Award, granted by the Polish Scientific Network for Labour Law and Social Security at the Faculty of Law and Administration of the University of Łódź.

The COOPERANTE Award is one of Poland’s most respected academic distinctions in the field of labour law and social security. The “Doctorate OPEN MIND” category specifically recognizes doctoral dissertations that combine research excellence with innovative thinking and tangible practical application for the business and social environment.

Dr Jęcek was honoured for her dissertation “Succession Administration in Labour Law” (Zarząd sukcesyjny w prawie pracy) — a comprehensive analysis of how employment relationships and business continuity are preserved following the death of a sole proprietor under Polish law. The topic is of growing strategic importance for family-owned enterprises, cross-border investors, and M&A transactions involving Polish targets, where workforce continuity and post-acquisition employment risk are central due-diligence concerns.

For our clients and partners, this recognition reinforces what defines our practice:

  • Depth of expertise — combining doctoral-level research with day-to-day advisory work,
  • Forward-looking advice — anchored in the latest scholarship on labour and succession law,
  • Practical relevance — guiding investors and business owners through complex transitions, including ownership changes, restructurings, and generational handovers.

We extend our warmest congratulations to Dr Jęcek and remain proud to count her among our team.

🔗 More about the award: https://cooperante.uni.lodz.pl/konkurs/

The Polish Family Foundation (2026)

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Why succession planning matters – the foreign investor’s perspective

A foreign investor doing business in Poland – whether through a Polish operating subsidiary, a holding vehicle, or a real estate or industrial portfolio – sooner or later faces the question of what should happen to the accumulated wealth in the next generation. The challenge is multi-dimensional: it spans tax and corporate law, the operational continuity of the business, the protection of the family’s long-term interests and, very often, the management of latent intra-family conflicts.

Conventional succession tools – wills, lifetime gifts or family-controlled holding companies – frequently fall short, particularly when significant business assets, cross-border family structures or a wide circle of potential heirs are involved. Insufficient succession planning typically leads to fragmentation of the business, forced heir reserve (zachowek) claims, decision-making paralysis and, ultimately, a destruction of the economic value built up over years.

To address these challenges, the Polish legislator introduced the family foundation (fundacja rodzinna) by the Act of 26 January 2023, in force since 22 May 2023. After almost three years of practical experience, this institution has proven to be a sophisticated planning tool – one that is fully accessible to foreign investors and broadly comparable to the family foundations long established in Liechtenstein, Austria, Switzerland or the Netherlands.

This article explains the legal architecture and tax regime of the Polish family foundation from the perspective of a foreign investor. It also addresses the current legislative status, including the consequences of the presidential veto of 27 November 2025 on the planned 2026 tightening of the regime, and the statutory review of the Family Foundation Act scheduled to take place after 22 May 2026.

Current legislative status – the regime that applies in 2026

The legal foundation of the institution is the Act of 26 January 2023 on the Family Foundation, supplemented by amendments to the corporate income tax (CIT), personal income tax (PIT), inheritance and gift tax, and civil law transactions tax acts that establish the dedicated tax regime applicable to family foundations.

In 2025 the Polish Ministry of Finance prepared a draft amendment to the CIT Act intended to take effect on 1 January 2026. The draft proposed substantial tightening of the family foundation regime, including a 36-month lock-up on assets contributed to the foundation, the application of controlled foreign company (CFC) and exit tax rules to family foundations, the exclusion of short-term rental income and most commercial real estate rental income from the CIT exemption, and an expansion of the so-called hidden profits category (covering, among others, loans extended to beneficiaries, founders and related parties).

On 27 November 2025 the President of the Republic of Poland vetoed the act passed by the Polish Parliament. The veto was justified, in particular, by reference to the constitutional principle of citizens’ trust in the State and to the premature character of the proposed changes – introduced less than three years after the institution itself, despite earlier assurances of regulatory stability. As a direct consequence, the planned tightening did not enter into force on 1 January 2026 and family foundations remain subject in 2026 to the unchanged regime introduced in 2023.

Foreign investors should nevertheless be aware that, under article 143 of the Family Foundation Act, the Council of Ministers is required to carry out a comprehensive review of the operation of the Act after 22 May 2026 (i.e. three years after its entry into force). This review is widely expected to become the starting point for a new legislative initiative, ideally with broader public consultation and a longer vacatio legis. From a planning perspective, 2026 should therefore be treated as a window of relative regulatory stability – a window that warrants disciplined use to put long-term wealth structures in place.

Legal architecture of the family foundation

The founder – who can establish a family foundation

Only a natural person with full legal capacity may act as the founder of a family foundation. A foundation may be established either by a notarial declaration of incorporation or by way of a will. Critically for foreign investors, the Act imposes no nationality or tax residency requirement on the founder – a non-Polish citizen, including a person permanently resident outside Poland, may validly establish a Polish family foundation.

Several individuals may jointly act as co-founders, provided they are closely related within the meaning of the Inheritance and Donation Tax Act or otherwise constitute a family. A foundation established by will, by contrast, may have only one founder – this restriction reflects the personal nature of testamentary dispositions under Polish law.

Beneficiaries and the international dimension

Beneficiaries of a family foundation may be natural persons and non-governmental organisations conducting public benefit activity. The founder enjoys broad discretion in defining the circle of beneficiaries and the conditions on which they receive distributions, including age requirements, completion of education, involvement in the family business or other criteria the founder considers relevant.

The Act does not restrict the choice of beneficiaries by reference to nationality or tax residency. The beneficiaries of a Polish family foundation may therefore include persons resident anywhere in the world, which is particularly significant for international business families: the Polish family foundation can serve as a centralised vehicle for managing family wealth across multiple jurisdictions, coordinating distributions to beneficiaries located in different countries.

Governance bodies

The mandatory governing body of every family foundation is the management board, which conducts the affairs of the foundation and represents it externally. The management board may consist of one or more members, who may be appointed from among the beneficiaries or from third parties. In foundations holding sophisticated investment portfolios or operating businesses, the appointment of professional managers is a common and recommended solution.

A supervisory board is generally optional, but becomes mandatory once the number of beneficiaries exceeds twenty-five. In practice, the appointment of a supervisory board is also advisable in foundations holding substantial assets or having a complex beneficiary structure, as it provides an internal control mechanism over the management board and a forum for managing intra-family conflicts.

The assembly of beneficiaries is a specific organ whose competences include, in particular, the approval of the foundation’s financial statements and decisions on matters expressly reserved to it in the statute. The scope of the assembly’s powers may be tailored by the founder to suit the specific family situation, allowing the corporate governance of the foundation to be precisely calibrated.

The statute – the foundation’s constitutional document

The statute of the family foundation, executed in the form of a notarial deed, is the foundation’s constitutional document. It must regulate, among other matters, the foundation’s purpose, the rules for maintaining the list of beneficiaries and the identification of beneficiaries (or categories of beneficiaries), the principles for granting and paying distributions, the structure and appointment of the foundation’s organs, and the rules for amending the statute and for dissolving the foundation.

The long-term effectiveness of the foundation as a succession tool depends critically on careful drafting of provisions addressing future family scenarios – including divorces, remarriages, the birth of further generations and conflicts among beneficiaries. Superficial or template-based statutes frequently become the source of serious legal complications and unforeseen tax exposure later in the foundation’s life.

The founding fund

The founder must contribute assets to cover the founding fund of the foundation, the value of which – as specified in the statute – may not be less than PLN 100,000. The founding fund may be covered both by cash and by other assets, including shares in companies, real estate, intellectual property rights or an enterprise within the meaning of the Civil Code.

The value of assets contributed to cover the founding fund is determined by reference to their market value at the date of contribution. After the foundation has been established, additional assets may be contributed to it, both by the founder and by third parties, including by way of donations or inheritance. Each such contribution must be reflected in the asset register (spis mienia), which has direct tax consequences for distributions subsequently paid to beneficiaries.

Permitted scope of business activity

A family foundation may conduct business activity exclusively within the closed catalogue set out in article 5(1) of the Family Foundation Act. This catalogue includes, among other items, the disposal of assets (provided they have not been acquired solely for resale), the leasing or other gratuitous or paid grant of use of assets, accession to and participation in commercial companies, investment funds, cooperatives and similar entities, the acquisition and disposal of securities, derivatives and similar rights, the granting of loans to specified categories of recipients, foreign exchange transactions, and certain types of agricultural and forestry activity.

The closed character of this catalogue requires careful analysis of the foundation’s intended business model already at the stage of drafting the statute. Income generated from activity falling outside the catalogue is taxed at a punitive 25% CIT rate – a substantial deterioration relative to the preferential regime applicable to in-catalogue activity.

From a foreign investor’s perspective, the most important provisions are those allowing the foundation to acquire and hold shares in commercial companies, both Polish and foreign. This makes it possible to use the family foundation as a holding company for the family’s entire corporate structure, centralising governance and rationalising dividend flows within the group.

Tax treatment of the family foundation

Subjective CIT exemption – tax-deferred accumulation

The family foundation is a CIT taxpayer but, as a general rule, benefits from a subjective CIT exemption in respect of income generated within the permitted scope of business activity. The construction is conceptually similar to the Polish Estonian-style CIT regime: the tax liability arises only at the moment a distribution is made to a beneficiary or assets are released upon dissolution of the foundation.

In practice this means that the family foundation may receive dividends from Polish and foreign subsidiaries, interest from loans and bank deposits, long-term rental income, proceeds from the disposal of securities or income from participation in investment funds – all without current CIT being payable. These funds accumulate within the foundation in their full amount, and their reinvestment in further assets does not trigger any tax liability at the foundation level.

Distributions – 15% CIT at the foundation level

When the foundation makes a distribution to a beneficiary or releases assets upon dissolution, it becomes liable to CIT at a rate of 15% calculated on the value of the distribution or assets. The taxable base is the value of the distribution, and the foundation may not reduce that base by deductible costs or depreciation.

The result is that – unlike a classical capital company, where profit is first subject to CIT and then the dividend distributed to shareholders is again taxed as capital gains – the aggregate tax burden on a distribution to a Group Zero beneficiary is 15%. For long-term family wealth this is a meaningful reduction relative to traditional dividend distribution models.

Beneficiary-level PIT – the role of family proximity

The PIT treatment of distributions in the hands of beneficiaries depends on the beneficiary’s family relationship to the founder, determined by reference to the categories used in the Inheritance and Donation Tax Act. Beneficiaries belonging to the so-called Group Zero in relation to the founder – that is, the spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother – are fully exempt from PIT on distributions, irrespective of their amount.

Beneficiaries falling within Tax Group I or Tax Group II under the Inheritance and Donation Tax Act (for example parents-in-law, son- or daughter-in-law, nieces and nephews, the founder’s parents’ siblings) are taxed at a preferential 10% PIT rate. Other beneficiaries – including unrelated persons and more distant relatives – are taxed at 15% PIT.

Distributions from a family foundation are not subject to social security contributions or to the health insurance contribution, and they are not included in the base for the so-called solidarity levy (a 4% surtax applicable above PLN 1 million of annual income). For high-net-worth families this represents a meaningful reduction relative to traditional capital income channels.

Effective tax rates – at-a-glance summary

The combined CIT and PIT burden on distributions from a Polish family foundation can be summarised as follows (assuming the foundation is funded entirely by a single founder and the beneficiary stands in the indicated relationship to that founder):

Beneficiary category (in relation to founder) PIT rate on distributions Effective combined burden (with 15% CIT at foundation level)
Founder; spouse; descendants; ascendants; siblings; stepchildren; stepfather; stepmother (so-called Group Zero)

 

 

 0% (full exemption) 15%
Other relatives within Tax Group I or II under the Inheritance and Donation Tax Act (e.g. parents-in-law, son-/daughter-in-law, nieces/nephews, parents’ siblings)

 

 

 10% 23.5%
Unrelated beneficiaries and other persons 15% 27.75%

 

Where the foundation has multiple founders, or where assets have been contributed by third parties, the PIT exemption (or the reduced 10% rate) applies only to that portion of a distribution which corresponds proportionally to the assets contributed by the relevant founder. This makes the structure of contributions, and a precise asset register, central to the achievable tax outcome.

Specific considerations for foreign investors

Foreign founder, internationally dispersed beneficiaries

Polish law imposes no nationality or residency restriction on the founder. A foreign investor with assets in Poland – whether shares in Polish companies, real estate, securities issued by Polish issuers or other property – may therefore validly establish a Polish family foundation and contribute Polish or foreign assets to it. Equally, the beneficiary group may include persons resident in any jurisdiction, which is particularly relevant where the family is geographically dispersed.

Distributions to non-resident beneficiaries

As a general rule, a Polish family foundation is a Polish tax resident with unlimited tax liability in Poland. Both the foundation-level CIT (15%) and any beneficiary-level PIT are settled within the Polish tax system, regardless of the beneficiary’s residency. Where the beneficiary is resident abroad, careful analysis of the applicable double tax treaty becomes essential.

Distributions made by a Polish family foundation do not always map cleanly onto the traditional treaty categories (dividends, interest, other income), which raises substantive interpretive questions. Each cross-border distribution scenario therefore warrants individual analysis combining Polish tax rules and the domestic tax law of the beneficiary’s state of residence – ideally supported, where appropriate, by an individual tax ruling issued by the Polish tax authorities.

Holding shares in Polish and foreign subsidiaries

The family foundation may hold shares in Polish and foreign capital companies, allowing it to operate as a family holding vehicle. Dividends received from Polish subsidiaries are covered by the foundation’s subjective CIT exemption.

In the case of dividends received from foreign subsidiaries, the relevant double tax treaties apply, as do – for EU-based subsidiaries – the rules implementing Council Directive 2011/96/EU on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (the Parent-Subsidiary Directive). Withholding tax exemption on a dividend paid by an EU subsidiary requires verification of the applicable conditions, including the minimum shareholding period and the substantive economic activity (substance) requirements that the Polish implementing rules impose.

Cross-border succession and private international law

Once assets have been contributed to the family foundation, they cease to form part of the founder’s personal estate and do not pass through inheritance on the founder’s death. Distributions made by the foundation after the founder’s death are governed by the foundation’s statute, not by inheritance law.

In a cross-border context, particular attention should be paid to Regulation (EU) No 650/2012 of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession. The Regulation – applicable in most EU Member States – generally subjects the entirety of the succession to the law of the State of habitual residence at the time of death, with an option to choose the law of the State of nationality. Properly aligning the family foundation structure with these cross-border succession rules is one of the most important elements of wealth planning for the foreign investor.

With respect to the Polish forced heir reserve (zachowek), the Civil Code introduces a meaningful limitation – under article 994 § 1¹, the value of distributions received by a beneficiary from the family foundation, and of assets received upon its dissolution, is added to the estate for the purposes of calculating the reserve only within the scope set out in the statute. This creates room for effective wealth planning that mitigates the risk of claims from disinherited heirs, which is of particular value in complex family configurations.

Practical implementation – key recommendations

The statute as a long-term governance instrument

Drafting the statute of a family foundation requires careful design of mechanisms for situations that may arise across several generations. The statute should, in particular, precisely define the circle of beneficiaries and the criteria for acquiring or losing beneficiary status, the principles and procedure for paying distributions (including any conditions attached), mechanisms for managing conflicts among beneficiaries, and the rules for amending the statute after the founder’s death. Any of these matters left unaddressed may, years later, become the source of significant legal complications requiring costly judicial intervention.

Asset register and its tax implications

Each contribution of assets to the family foundation must be reflected in the asset register, which records the origin of each component of the foundation’s wealth. This has direct consequences for the taxation of subsequent distributions: where the foundation has multiple founders, or where third parties have contributed assets, the PIT rate applicable to distributions is determined proportionally to the relevant founder’s share in the total assets of the foundation.

From a tax planning perspective, it is important to ensure that all – or at least the predominant part – of the foundation’s assets originates from the founder whose immediate family will be the principal beneficiary group. In structures where the foundation receives assets from more than one founder or from third parties, the effective tax rate on distributions may be materially higher than the headline rates suggest.

Compliance and monitoring of the regulatory environment

Given the statutory review of the Family Foundation Act expected after 22 May 2026, and the announced resumption of legislative work on the tax regime, every family using a foundation as part of its wealth structure should implement systematic monitoring of regulatory developments. Decisions on significant restructuring or disposal of foundation assets in 2026 should be considered in light of the risk that a future amendment may introduce a lock-up period or other restrictions materially affecting the efficiency of comparable transactions in the new regime.

International groups – transfer pricing discipline

Where the family foundation forms part of an international corporate group and engages in transactions with related parties – in particular where it operates as a holding company controlling foreign subsidiaries – appropriate transfer pricing policies must be implemented. Related-party transactions exceeding the statutory thresholds require local transfer pricing documentation, and remuneration for services must be set on an arm’s-length basis. Failure to comply may not only trigger ordinary transfer pricing consequences but also expose the foundation to recharacterisation of the transactions as hidden profits subject to the 15% CIT.

Conclusions and strategic recommendations

The Polish family foundation is a powerful instrument for foreign investors planning the succession of wealth accumulated through investment activity in Poland or via Polish holding structures. The combination of a flexible legal architecture, a preferential tax regime and effective limitation of forced heir reserve claims places it in line with the most sophisticated international family wealth planning tools.

The current legal framework – stabilised in 2026 by the presidential veto of 27 November 2025 against the planned tax tightening – creates a window of relative regulatory certainty that warrants disciplined use to put long-term wealth structures in place. At the same time, the upcoming statutory review after 22 May 2026 and the announced return of legislative work on the regime require ongoing attention and the willingness to adapt wealth management strategies as the regulatory environment evolves.

Effective use of the family foundation requires an individually tailored design that takes account of the founder’s asset base, the beneficiary structure, the planned distribution policy and the international dimension of the family. The support of legal and tax advisers with significant experience in advising foreign investors remains essential to achieve the intended outcomes and to avoid tax exposures which – in the case of misclassified transactions or documentary shortcomings – can materially erode the benefits of the family foundation regime.

ABOUT ATL LAW

ATL Law is a Polish law firm specialising in comprehensive legal services for foreign investors active on the Polish market. We provide multilingual advice in corporate law, tax law, succession planning and employment law. We have substantial experience in designing family foundation structures for international business families, including the drafting of statutes, tax planning and obtaining individual tax rulings to secure long-term wealth strategies. We support our clients at every stage – from structural concept and implementation, through ongoing operations, to representation in tax proceedings and forced heir reserve disputes

EU Inc. and Poland: A Strategic Guide for Foreign Investors Setting Up in the EU Before 2028

Posted on by kancelaria

The European Commission’s proposal for a single, EU-wide company form (EU Inc.) raises an immediate question for foreign investors planning to enter the European market: should you incorporate now, or wait? For those looking at Poland, the answer is more nuanced than it first appears.

The question every foreign founder is now asking

If you are a US, UK, Asian or Middle Eastern investor planning to launch operations in the European Union in the next three years, you are now facing a strategic decision that did not exist a year ago.

Until recently, your choice was relatively simple: pick a Member State, set up a local company (in Poland typically a spółka z ograniczoną odpowiedzialnością — sp. z o.o.), and accept that scaling into other EU countries would mean either local subsidiaries or complex cross-border structures.

The European Commission’s recent proposal for EU Inc. — formally Societas Europaea Unificata — changes that calculus. The proposal envisages an optional, fully digital, EU-wide company form that would be recognised across all 27 Member States under a single set of rules.

If the legislative timetable holds, the first EU Inc. companies could be incorporated in 2028.

That leaves foreign investors with a planning window of roughly two years — and several decisions to make now.

What EU Inc. actually offers

The proposal is built around six core features, each designed to address a specific pain point that has long pushed European founders toward Delaware rather than EU jurisdictions:

Feature EU Inc. proposal
Minimum share capital EUR 1
Incorporation time Up to 48 hours
Maximum incorporation cost EUR 100
Filing model “Once only” — data submitted once, tax and VAT numbers issued automatically
Notary requirement on share transfers None
Lifecycle Fully digital from incorporation to liquidation

In addition, EU Inc. is expected to permit flexible share classes and simplified employee stock option plans — two features that have historically been awkward to deliver under several Member State company laws, and that matter enormously to venture-backed companies.

Crucially, EU Inc. is intended as a parallel option rather than a replacement for national company forms. Polish sp. z o.o., German GmbH and French SARL will all continue to exist. EU Inc. simply adds a 28th regime — one designed to be neutral across borders.

Why Poland still matters in an EU Inc. world

It is tempting to assume that a single EU-wide company form will make the choice of incorporation jurisdiction irrelevant. It will not. Several factors keep Poland firmly on the map for foreign investors, even after EU Inc. enters into force:

Operational footprint, not legal form, drives tax exposure. EU Inc. does not create a unified EU tax residence and does not establish a common corporate income tax regime. Where your company has its actual place of management, its permanent establishments, and its workforce will continue to determine where it pays tax.

Talent and operational costs. Poland remains one of the most cost-competitive locations in the EU for engineering, finance and shared-service operations, with a deep IT talent pool and growing R&D capacity.

Domestic market access. Poland is the largest economy in Central and Eastern Europe and the sixth largest in the EU. Many foreign investors enter the EU specifically to serve this market, and a Polish entity is operationally easier to manage than a remote EU Inc. structure when the substance is in Poland.

Existing tax incentives. Poland offers regimes — including the Polish Investment Zone (Polska Strefa Inwestycji), R&D tax relief, IP Box and the Estonian CIT model — that are tied to Polish tax residence and Polish entity status. EU Inc. does not unlock these automatically.

In short: EU Inc. simplifies the legal vehicle, but it does not simplify the economic and tax reality of doing business in Poland.

The tax trap foreign investors must understand

The single most important point for foreign investors evaluating EU Inc. is this: the legal harmonisation does not extend to taxation.

The proposal does not create:

  • a unified EU corporate tax residence,
  • a common corporate income tax base,
  • harmonised rules on permanent establishments,
  • a single VAT regime for EU Inc. companies.

In practice, an EU Inc. company will still need to determine — under the existing rules of each Member State concerned — where its place of effective management is located, where it has permanent establishments, where it should be VAT-registered, and how its cross-border payments (dividends, interest, royalties, board remuneration) are taxed under applicable double tax treaties.

For a foreign investor running operations from Warsaw, Kraków or Wrocław, this means:

  1. Polish CIT will apply if Poland is the place of effective management or if a Polish PE exists.
  2. Withholding tax obligations on payments to non-resident shareholders, board members and service providers will continue to apply under Polish law and the relevant double tax treaty.
  3. Polish anti-avoidance rules — including the General Anti-Avoidance Rule (GAAR), beneficial ownership requirements, and “due diligence” obligations on Polish payers — will continue to apply.
  4. Recent CJEU case law on board member liability for corporate tax arrears (rulings C-277/24 and C-278/24 of 2025) and Poland’s pending implementation in the Tax Ordinance amendments (UC138) will apply equally to EU Inc. board members operating in Poland.

The risk is not theoretical. Because interpretation of EU Inc. rules will largely fall to national courts, the same legal form may be treated differently across Member States. Investors should expect divergent practice — and plan accordingly.

Strategic options for foreign investors today

Given that EU Inc. is at least two years away from being operational, foreign investors planning to enter the Polish or wider EU market should not wait. Three approaches are worth considering:

Option 1: Incorporate a Polish sp. z o.o. now, convert later if useful.

For investors with a clear Polish operational footprint — a local team, local clients, local supply chain — incorporating a sp. z o.o. now is the lowest-risk path. The form is well-understood, eligible for Polish tax incentives, and operationally efficient. If EU Inc. proves attractive after 2028, conversion or restructuring can be evaluated then.

Option 2: Build the structure now with EU Inc. in mind.

For founders planning genuinely cross-border operations from day one — typically VC-backed startups expecting to scale into multiple EU markets within 2–3 years — it makes sense to design today’s holding and operational structure so that an EU Inc. holding company can be inserted later without triggering significant tax friction. This usually means clean cap tables, well-documented share classes, and avoiding contractual lock-ins that complicate restructuring.

Option 3: Wait — but only if the timing works.

For investors whose go-to-market is genuinely 2028 or later, waiting may be defensible. But it carries opportunity cost: two years of lost market presence, lost talent acquisition, and lost regulatory familiarity.

In practice, the first two options will fit the vast majority of cases.

What to watch in the legislative process

Several elements of the EU Inc. proposal remain open and will materially affect its attractiveness:

  • Final position on minimum substance requirements — to prevent purely “letterbox” incorporations.
  • Interaction with national tax incentives — whether Polish tools such as Estonian CIT and IP Box will be available to EU Inc. companies with Polish tax residence.
  • Role of the Court of Justice of the EU — the stronger the role of the CJEU in interpreting EU Inc., the lower the risk of 27 divergent national approaches.
  • Transitional rules for existing Societas Europaea companies — relevant for the small number of investors already using SE structures.

The Polish legislative response — adapting the Court Register (KRS), notarial law, and tax procedure to accommodate EU Inc. — will also matter. ATL Law is monitoring the legislative process at both EU and Polish level.

Key takeaways

EU Inc. is, on paper, the most ambitious reform of European company law in decades. It directly addresses the structural disadvantages that have pushed European founders toward Delaware: cost, speed, fragmentation, and inflexibility. For cross-border founders, VC and PE funds, and scale-ups, it has the potential to become the default choice from 2028 onward.

But EU Inc. is not a tax solution. Foreign investors operating in Poland will continue to face Polish CIT, Polish withholding tax, Polish VAT, and Polish anti-avoidance rules — regardless of whether they use a sp. z o.o. or an EU Inc. The legal form simplifies; the tax substance does not.

For most foreign investors planning entry into Poland and the wider EU between now and 2028, the practical course is to incorporate locally now and review the EU Inc. option as soon as the final text and Polish implementing rules are known.

Planning to set up in Poland? ATL Law advises foreign investors on choice of legal form, cross-border tax structuring, and the interaction between Polish corporate and tax law and emerging EU instruments such as EU Inc. Get in touch to discuss your entry strategy: office@atl-law.pl

Poland’s 5% Tax Rate on Software IP

Posted on by kancelaria

Tax incentives for technology companies operating in Poland – a practical overview based on recent tax authority rulings

Poland has emerged as one of Europe’s most attractive destinations for technology investment. Beyond its deep pool of engineering talent and competitive labour costs, the country offers a powerful – yet still underutilised – tax incentive specifically designed for businesses generating income from intellectual property. Known as the IP Box (Innovation Box), this regime allows qualifying taxpayers to apply an effective rate of just 5% on income derived from eligible IP rights, compared to the standard 19% flat rate for business income (podatek liniowy) or progressive rates of up to 32% under the general tax scale.

How the IP Box Works in Practice

Introduced on 1 January 2019, the IP Box regime is codified in Article 30ca of the Polish Personal Income Tax Act (ustawa o PIT) and the corresponding provisions of the Corporate Income Tax Act (ustawa o CIT). It applies to income generated from a closed list of qualified intellectual property rights, which includes patents, registered designs, plant variety rights and – crucially for the technology sector – copyrights to computer programs (autorskie prawo do programu komputerowego). To benefit from the preferential rate, the taxpayer must demonstrate that the qualifying IP was created, developed or improved as part of research and development activities (działalność badawczo-rozwojowa) carried out within the taxpayer’s own business.

The qualifying income is then multiplied by the so-called nexus coefficient – a fraction that rewards taxpayers who conduct R&D in-house rather than outsourcing it or acquiring finished IP from related parties. The formula, modelled on the OECD’s modified nexus approach under BEPS Action 5, effectively ensures that the tax benefit is proportional to the taxpayer’s own contribution to the creation of the IP. Where all R&D is performed directly by the taxpayer, the nexus coefficient reaches its maximum value, and the full qualifying income benefits from the 5% rate.

Software Development as R&D – Confirmed by Tax Authorities

A recurring concern among foreign investors and their Polish subsidiaries or contractors is whether bespoke software development genuinely qualifies as R&D under Polish law. The definition, rooted in Article 4(3) of the Law on Higher Education and Science (Prawo o szkolnictwie wyższym i nauce), requires that the activity involve acquiring, combining, shaping and applying existing knowledge and skills to design and create new or improved products, processes or services – excluding routine and periodic modifications. Recent rulings by the Director of the National Tax Information Authority (Dyrektor Krajowej Informacji Skarbowej) have consistently confirmed that custom software development meets this threshold, provided three conditions are satisfied.

First, the work must be creative in nature – resulting in original, individually designed solutions rather than mechanical reproduction of existing code. Second, it must be conducted systematically, meaning in an organised and methodical manner with defined objectives, milestones and verification stages. Third, it must be aimed at increasing the developer’s knowledge base and applying that knowledge to produce new solutions. Importantly, the Polish tax authorities have clarified that “systematic” does not mean “continuous” – even a single, well-structured project may satisfy this criterion.

A November 2025 ruling confirmed that a sole-trader developer creating bespoke applications qualified for IP Box across all four tested criteria – from the R&D classification of their work through to the eligibility of vehicle and bookkeeping costs in the nexus formula.

Deductible Costs and the Nexus Coefficient

The nexus formula distinguishes four categories of costs, labelled “a” through “d” in the statute. Category “a” – costs of R&D conducted directly by the taxpayer – carries the greatest weight and is the most relevant for developers performing their own work. Polish tax rulings have accepted a broad interpretation of these costs, encompassing hardware and peripherals used for development, software tools and licences, telecommunications and mobile devices, vehicle expenses (including lease payments, fuel and insurance) where the car is used for client consultations related to the software, accounting services connected with maintaining the required IP records, and professional training and technical literature.

The statute explicitly excludes interest, financial charges and real-estate-related costs from the nexus calculation. Beyond these statutory exclusions, the key requirement is a direct, functional link between the expenditure and the creation of a specific qualifying IP right. Taxpayers must be able to allocate costs to individual IP rights – where direct allocation is not feasible, a revenue-based apportionment key (klucz przychodowy) has been accepted by the authorities as a permissible method.

Record-Keeping Requirements – a Non-Negotiable Condition

Foreign investors should be aware that the IP Box benefit is conditional on meticulous contemporaneous documentation. Article 30cb of the PIT Act requires taxpayers to maintain a separate ledger (odrębna ewidencja) that identifies each qualifying IP right individually, tracks revenues, costs and profit or loss attributable to each right, and isolates the cost components needed for the nexus calculation. This ledger must be maintained from the outset of the R&D activity – not reconstructed after the fact. Failure to maintain adequate records disqualifies the taxpayer from the preferential rate entirely, reverting the income to standard taxation.

For companies with Polish development teams or individual contractors engaged on B2B terms, this means that the compliance infrastructure should be designed and implemented before the first line of qualifying code is written. Retroactive record-keeping carries significant audit risk and may lead to the entire benefit being denied.

Structuring Considerations for Foreign-Owned Operations

The IP Box regime is available to both individual entrepreneurs (jednoosobowa działalność gospodarcza) and corporate taxpayers. For foreign investors, this creates planning opportunities at multiple levels. A Polish subsidiary developing proprietary software may apply the 5% CIT rate to qualifying income generated from that IP – whether through direct sales, licensing arrangements, or by embedding the IP in products and services sold to customers. Similarly, individual Polish contractors engaged on B2B terms may apply the 5% PIT rate to the portion of their income attributable to the transfer of copyrights in software they create.

However, the regime rewards substance, not mere structuring. The nexus coefficient penalises arrangements where the IP is acquired from related parties or where the R&D is outsourced to affiliates. The maximum tax benefit is achieved when the Polish entity or individual performs the qualifying R&D work directly. This aligns well with the typical model of foreign companies establishing development centres in Poland – the very structure that generates the highest nexus coefficient also corresponds to genuine economic activity on the ground.

How ATL Law Supports Foreign Investors with IP Box Implementation

ATL Law provides end-to-end advisory services for foreign companies and international entrepreneurs seeking to leverage Poland’s IP Box regime. Our team combines deep expertise in Polish tax law with practical experience advising technology businesses, enabling us to guide clients through each stage of the process: from the initial assessment of whether their Polish operations generate qualifying IP income, through the design and implementation of compliant record-keeping systems, to the preparation of advance tax ruling applications (wnioski o interpretację indywidualną) that provide legal certainty and protection in the event of a future audit.

We also review existing contractual arrangements between foreign parent companies and their Polish subsidiaries or contractors to ensure that the transfer of IP rights is properly documented and that the remuneration structure supports the application of the preferential rate. For groups operating across multiple jurisdictions, we coordinate with international tax advisors to ensure that the Polish IP Box benefit integrates seamlessly with the group’s overall transfer pricing and IP ownership strategy.

 

This article is for informational purposes only and does not constitute tax or legal advice. The application of the IP Box regime depends on the specific facts and circumstances of each case. Professional advice should be sought before making any decisions based on the information provided.