This article will answer the following questions:

• What tax exemptions can holding companies benefit from? 
• What conditions must a company meet to be recognised as a holding company within the meaning of the CIT Act? 

The CIT Act provides for the possibility for holding companies to benefit from tax exemption on: 

• all dividends received from a subsidiary, 
• income of a holding company from the sale of shares in a subsidiary to an unrelated entity.

Such exemption from CIT is provided only for holding companies, therefore a company wishing to benefit from the preference must meet the conditions specified in Art. 24m(1)(2) of the CIT Act. 

One of these conditions indicated by the legislator is the prohibition of holding – even indirectly – shares in the holding company by an entity whose registered office or management board is located in a so-called tax haven. The prohibition also applies to those countries or jurisdictions with which Poland or the EU do not have a ratified international agreement that could constitute a basis for obtaining the necessary tax information from tax authorities. 

The condition imposed by Polish tax regulations turns out to be problematic in the case of companies whose shareholder is an entity listed on the stock exchange (which is common, because entities of this type usually have a dispersed and fluid ownership structure, which makes it practically impossible to identify all shareholders – especially when the shareholders are natural persons). 

Unfavourable approach of the Head of the National Revenue Administration Information Centre towards the possibility of exempting certain holding companies from CIT… 

The Head of the National Revenue Administration Information Centre, in the interpretations she issues, does not take into account economic realities and denies holding companies whose shareholder is a listed company the right to apply the exemption. 

According to the tax authorities, if a company has no way of checking whether its indirect shareholder (who holds shares in a company listed on the stock exchange) does not have its registered office or management board in a country or jurisdiction classified as a tax haven, then such a company cannot be recognised as a holding company and is therefore not entitled to the CIT exemption. 

…And the favourable approach of Polish courts resolving disputes regarding CIT exemption

Fortunately for holding companies operating in Poland, the Provincial Administrative Court in Warsaw once again showed a common-sense approach, concluding that a purposive, not literal, interpretation should be used, and, consequently, the analysis of indirect ownership of shares in a company at the level of a listed company should be ended, without taking into account further shareholder ownership structure. 

A series of judgments were issued in that matter, so we can speak of the formation of a line of jurisprudence favourable to taxpayers. In the judgments of 4 April 2023 (Ref. No. III SA/Wa 2245/22), 18 April 2024 (Ref. No. III SA/Wa 296/24), 12 September 2024 (Ref. No. III SA/Wa 1513/24 and III SA/Wa 1523/24), and 18 September 2024 (Ref. No. III SA/Wa 1529/24), the Provincial Administrative Court ruled that the requirement for holding companies to determine whether their indirect shareholders have no links with a tax haven is not possible to meet and is not related to the purpose of the exemptions introduced. 

The court noted that the interpretation adopted by the Head of the National Revenue Administration Information Centre was too formalistic and did not take into account the economic realities and the operation of international capital groups in whose structures holding companies operate.

The judgments are not final and it can be assumed that the cases will end at the Supreme Administrative Court stage. However, the application of the economic interpretation of the law by the Provincial Administrative Court shows that the taxpayers' fight for the correct interpretation of the regulations makes sense. Courts take into account the economic realities in which companies operate, which is why it is worth using the help of tax experts and challenging overly formalistic interpretations of the Head of the National Revenue Administration Information Centre.