General Anti-Avoidance Rules were introduced in the domestic tax legislations effective 15 July 2016. The rules may be applied in respect of any tax benefits received on or after 15 July 2016, regardless of when the related transaction was entered into.

GAAR will apply if a taxpayer uses artificial legal actions with the primary purpose of obtaining tax benefits not in line with the object and purpose of the law. Targeted schemes include in particular, but are not limited to, the use of hybrid instruments, the use of offshore entities in low tax jurisdictions, the use of debt instruments to produce high interest expenses with corresponding withholding tax exemptions under tax treaties, etc. If it is determined that the main purpose of a transaction is to obtain a tax benefit, the tax authorities may re-characterize the transaction as if an appropriate transaction had occurred, and in certain cases may disregard a transaction entirely.

GAAR provides for a PLN 100,000 tax benefit threshold, under which it will not be applied. It also provides that if a taxpayer is unsure if the GAAR may apply to a particular transaction, a formal opinion from the Ministry of Finance may be obtained. However, such an opinion is not a ruling, and offers no protection from the GAAR being applied.

Other Anti-Avoidance Measures

Effective 1 January 2017, the government introduced the following measures targeting tax avoidance in relation to share exchanges, reorganizations and transfers:

Tax deferral for the exchange of shares will only apply for an exchange of shares if performed for sound economic reasons and not only for tax purposes;
Mergers and divisions will be deemed to be motivated by tax purposes and subject to tax assessment if no sound economic reasons can be shown; and
The value of in-kind contributions of assets to corporate entities is specified as the value indicated in the company’s articles of association and not the nominal value of shares issued to the taxpayer.

Effective 1 January 2018, the government has introduced the following measures to counter debt push down acquisitions and aggressive tax optimization:

Restriction on tax deductibility of interest expenses incurred for acquisition of shares in a company to the extent it reduces taxable income of the acquired company (for example, debt push down strategies)
Modification of tax rules governing the functioning of tax capital groups (See Sec 5.3).

Jurisdictions with Preferential Tax Regimes

Taxpayers dealing with listed countries and territories are subject to greater scrutiny and may trigger the application of CFC rules or transfer pricing rules. A subsidiary set up in a tax haven is considered as a CFC and its income for the whole year is included in the taxable income of the Polish resident (See Sec 13.3.1).

Effective from 1 January 2018, the tax deductibility of certain payments to related parties and tax haven entities in excess of PLN 3 million is restricted to 5% of EBITDA.

Payments subject to this limit include payments for:

Advisory services, market research, advertising services, management and control, data processing, insurance billing, guarantees, and similar services;
Fees for the use of or the right to use intangible assets (royalty payments, licensing fees, etc.); and
The transfer of default risk from loans, other than those provided by banks and credit unions, including with respect to obligations arising from derivatives and similar benefits.

The restriction will not apply where the expenses are directly related to the production of goods and rendering of services and where the expenses are covered by an APA entered into with Polish tax authority. The non-deductible amounts may be carried forward up to five years.

The updated list of countries and territories applying harmful tax practices (tax havens) is applicable from 23 May 2017 and includes the following countries and territories:

Andorra	Anguilla	Antigua and Barbuda	Bahrain
British Virgin Islands	Cook islands	Curaçao	Sint Maarten
Dominica	Grenada	Hong Kong	Liberia
Macau	Maldives	Marshall Islands	Mauritius
Monaco	Nauru	Niue	Panama
Samoa	Seychelles	Saint Lucia	Sark
Tonga	U.S. Virgin Islands	Vanuatu

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