Poland amended its Corporate Income Tax Act to align with a CJEU ruling that its tax exemption for externally managed non-resident investment funds violated EU free movement of capital, addressing indirect discrimination in favor of domestic operators.
Poland published the Act of 6 November 2025 amending the Corporate Income Tax Act in the Official Gazette on 28 November 2025. The Act aligns Polish tax rules with European Court of Justice rulings on the taxation of investment and pension funds.
This follows the Court of Justice of the European Union (CJEU) ruling C-18/23 on 27 February 2025, which established that the Polish tax exemption for externally managed nonresident investment funds violated the free movement of capital under EU law.
Under Polish law, all domestic funds are exempt from corporate income tax. The Polish Tax Code also exempts corporate income tax on Polish-generated income for open-ended funds (UCITS) and other non-UCITS investment funds, including specialised and closed-ended funds, based in an EU or EEA jurisdiction. However, these funds must be managed by entities authorised by the financial market supervisory authorities of the state where the manager is externally managed). Under Polish law, establishing internally managed investment funds is not allowed.
The CJEU ruled that the Polish tax exemption violated the free movement of capital. The CJEU stated that the Polish law exemption did not constitute direct discrimination, as it wasn’t based on the fund’s residence. Nonetheless, the court found it could lead to indirect discrimination because the tax exemption depends on conditions tied to the national market, which favoured resident operators over nonresidents.
