Poland

Mandatory Disclosure Rules (MDR)

The MDR law in Poland, which transposes the Council Directive 2018/822 of 25 May 2018 (DAC6 Directive), entered into force as of 1 January 2019.

The Polish MDR legislation has a broader than the DAC6 Directive, stipulating an extended definition of reportable tax arrangements (covering not only cross-border but also domestic tax arrangements), as well as an extended list of hallmarks and a wider definition of covered taxes, including domestic VAT.

Polish MDR provisions are applicable to both Polish tax residents, as well as non-Polish residents. As a result - in practice - more types of arrangements might be reportable under Polish MDR provisions than under DAC6.

Polish MDR legislation listsed 24 hallmarks divided into three categories: generic, specific and other specific hallmarks. Only 11 of them, constituting the generic hallmarks, require the so-called main benefit test to be met, with the remaining ones giving rise to reporting obligations regardless of whether the main benefit test is satisfied. Polish MDR regulation requires the reporting of:

• cross-border tax schemes, in relation to which the first activity related to their implementation was made after 25 June 2018, and
• domestic tax schemes, in relation to which the first activity related to their implementation was made after 1 November 2018.

Reporting obligation with regard to tax schemes generally arises within 30 days from the date the scheme is shared or implemented.

Failure to report or other non-compliance may be connected with fines:

• up to PLN 10 million for an entity being a promoter, and
• for individuals responsible for non-compliance - up to the maximum threshold of 720 daily rates, which translates into the maximum possible penalty of up to PLN 44.792.640 in 2025,

Taxpayers whose revenue or costs exceed PLN 8 million in the previous tax year may be required to implement an internal procedure on fulfilling the obligation to provide information on tax schemes to comply with Polish MDR regulations. Failure to do so can result in penalties up to PLN 2 million.

Please also note that pursuant to Polish MDR rules, a tax scheme should be identified, inter alia, in case of payments, recognised as tax deductible costs, are made to a related entity located in a country applying harmful tax competition (including those indicated in the EU list of non-cooperative jurisdictions for tax purposes), while the occurrence of a tax advantage or the value of the transaction remains irrelevant in such a case. On 14 February 2023, the EU added the Russian Federation to its blacklist of tax havens. Thus, any transactions with related entities based i.a. in Russia should be identified as cross-border tax schemes.

New obligatnions on digital platform operators (DAC7)

As of 1 July 2024, legislation implementing the DAC7 Directive came into force, aiming to combat tax fraud by establishing uniform reporting standards for digital platform operators across the EU. 

The new regulations impose a number of new obligations on digital platform operators, i.e. entities that contract sellers to make available all or part of a platform to such sellers. Platform operators are obliged in particular to: 

• provide the Head of the National Revenue Administration with data of the reportable sellers and 
• comply with specific due diligence procedures (these procedures relate to, i.a., determining the status of sellers, their residence and reliability of the information obtained), also with regard to sellers who were registered on the platform as of July 1, 2024.

Information on the following activities ("relevant activities") will be reported to the Head of the National Revenue Administration:

• provision of real estate, share in real estate or parts thereof, including adjoining premises, 
• provision of personal services, including time- or task-based work performed by a natural person acting for or on behalf of an entity via the platform at a user's request online or physically offline after its execution has been enabled via the platform, 
• sale of goods, 
• rental of modes of transport.

The first reporting obligation should have been submitted to the Polish tax authorities by January 31, 2025 for two years - 2023 and 2024. Subsequent reports should be submitted annually.

Non-compliance with DAC 7 requirements may result in penalties for platforms, which may amount to up to PLN 1,000,000. The maximum fine for the responsible individual may even exceed PLN 10 million.

Theis legislation implementing the DAC7 Directive in Poland legislation also introduced additional data protection requirements with regard to MDR provisions. Under the new laws, promoters and supporters must inform individuals in writing about collecting and the processing of their data in relation to reported tax schemes concerning them. As a result, the internal MDR procedures require verification and amendment to comply with the above mentioned changes to MDR provisions as well as data protection laws, as non-compliance could lead to penalties under both regulatory frameworks.

Limitation for cash payments 

A company cannot settle payments to another entrepreneur in cash if the one-off transaction value exceeds the equivalent of gross PLN 15,000. The limit applies to the value of the transaction, regardless of the number of payments made as part of the transaction. The one-off transaction value is the entire value of the receivables or liabilities expressed in money, resulting from the paid delivery of goods or the paid provision of services specified in a contract concluded between entrepreneurs.

If the price is specified in a foreign currency, the transaction value is calculated on the basis of the central bank exchange rate on the business day preceding the transaction date.

In addition, payments above PLN 15,000 to another entrepreneur who is an active VAT payer should be made to their bank account verified on the White List of VAT payers (see the Other taxes section).

Violation of the limit for cash payments results in exclusion of such a payment (the entire amount is paid without the bank account) from tax deductible costs of a buyer.

Entrepreneurs registered outside Poland, but providing services in the territory of Poland, do not have to apply a cash payment limit. However, this only applies to those situations in which the activity of a foreign entrepreneur may be considered as cross-border provision of services. If a foreign entrepreneur was required to register a branch in Poland and did not do so, the transaction exceeding the statutory limit should be paid in a non-cash form.

In payment transactions in which the parties are the entrepreneur and the consumer, it is the consumer who decides in what form the consumer wants to pay: in cash or non-cash. 

Entrepreneurs who are required to record sales with a cash register must allow consumers to pay without using cash, using a payment instrument. Entrepreneurs must provide such a possibility in every place where they carry out their activity.

Multilateral Instrument to Modify Bilateral Tax Treaties (MLI)

The MLI globally implements mechanisms created to prevent international profit shifting to locations where they are subject to reduced taxation or non-taxation. 

Poland was the third country (after Austria and Isle of Man) to ratify the MLI. The Act on ratification of the MLI was published in the official Journal of Laws on 14 November 2017. Poland declared 78 DTTs for the MLI’s purposes. As of 1 January 2025, Poland applies the MLI Convention in relation to double taxation treaties with 58 countries. 

Poland's approach with regard to the scope of the adopted MLI provisions includes (in addition to the regulations that constitute the minimum standard) inter alia: rules for limiting the use of hybrid mismatches, determining the tax residence of dual resident entities, changing the method of avoiding double taxation (tax exemption method with progression to the credit method), the real estate clause, and cooperation between states regarding the adjustment of profits of related entities.