On 8 September 2021, the Polish government submitted a bill to the Parliament including the proposal extending the application of the CFC rules. The proposal includes the following changes:
Extension of the definition of a foreign legal entity to entities whose co-owners with at least 25% of the shares in capital or voting rights in the bodies that control, constitute, manage or have the right to participate in the profits are Polish tax residents who, in the wording of the proposed regulations, no longer have to be related entities.
Modification of the current CFC definitions through extending the catalogue of passive revenues, and increasing the minimum effective tax rate that implies the taxation of CFCs. The threshold of 33% passive income in the total income of a CFC remains unchanged.
An effective income tax rate paid by a CFC will be regarded as low if it is at least 25% lower than the Polish CIT rate of 19% payable on CFC income (currently it is considered low if it is at least 50% lower is than the Polish CIT rate).
