Global News

10 / 08 / 17 – Poland: Newsletter 37/2017 - Tax authorities are focusing on incentive programs

The Ministry of Development and Finance has published a bill amending, among others, the PIT Act with respect to incentive program taxation.

The bill applies to issues significant to each incentive program participant and organizer, namely when the tax should be paid, rate at which income should be taxed and who must pay the tax.

The bill provides for more severe conditions to be met if the tax point is to be postponed to the share sale date and the rate of 19% applicable to money capital is to be applied.

In practice, the proposed changes may lead to the following: 

  • benefits from incentive programs may be treated as revenues arising from the employment relationship or activities performed in person and should be taxed following the general rules (18%, 32%) while the company as the program organizer will act as the PIT payer,
  • the obligation to pay the tax may arise as early as when the options are exercised and not when the shares are sold.

According to the bill, the amendments are to take effect on 1 January 2018. Incentive program organizers and participants have time to check how these amendments will affect their tax obligations and burdens.

The statement issued by the Head of the Polish Tax Administration on 1 August 2017 confirms the increased interest of the tax authorities in incentive programs, too.

If the incentive program is based on the fixed model of operation presented in the statement, the Head of the Polish Tax Administration is of the opinion that the company only wants to take advantage of the tax allowance and apply the preferential rate of 19% with respect to the fee which in fact constitutes revenues under the employment relationship. A company, which wants to secure tax consequences of the incentive program by applying for an advanced tax ruling, should be aware that such ruling may not be issued due to a justified presumption that a tax avoidance clause may apply.

We will inform you about the legislative process and the tax authorities’ current approach to the incentive program taxation on an ongoing basis.
If this issue pertains to your business and you are interested in our assistance, please contact your WTS&SAJA consultant or our office.

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

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