Optimisation and Planning

Choice of a legal form or location for a business activity may have significant consequences to its taxation. A well planned structure of your business can result in lowering tax burdens. Below please find some examples of available optimization opportunities.

  • Dividends transferred from a company seated in Poland to a company seated in Poland or in another European Union member state is exempt from taxation. The exemption is subject to several conditions. Generally, the beneficial owner of dividends must have a direct shareholding of at least 10% in the capital of its subsidiary incessantly for at least two years.
  • Also interest and royalties transferred between the associated companies located in the EU are exempt from taxation. The exemption shall be introduced in Poland as of July 1, 2013, at present such payments are subject to 5% withholding tax.
  • In case the above exemptions do not apply, favorable taxation at source provided for in most of the DTTs can be referred to. Conditions for application of a DTT is usually: legal status of the recipient (company), determined amount of shareholding (for instance 10% in USA-Poland and Germany-Poland DTT), confirmation of the tax residence of the recipient with a certificate of tax residency.
  • Tax beneficial offshore locations – to mention just those in the EU – in Cyprus, Luxemburg and Malta. Each of them is recommended for different types of activity and objectives, for instance Luxemburg is most popular for financial and insurance activity, Cyprus on the other hand for managing and transfer of copyright. These locations offer numerous benefits such as confidentiality of transactions and bank procedures, favorable taxation of management of the company (Cyprus), less rigid (or none) transfer pricing regulations, institution of a nominal shareholder allowing for confidentiality and minimum involvement of the actual investor (Cyprus).