attorney Igor Bąkowski
Bakowski Law Firm, Warsaw, Poland
Profit repatriation
There are generally no restrictions of repatriation of profits. There are no restrictions on the transfer of shares inside Poland and the repatriation of proceedings.
Companies can convert and transfer currency in order to make payments in other countries or they may transfer their share of profits (after the taxes have been deducted) for their Polish activities. The capital gained by foreign investors in Poland can be completely withdrawn from Poland in certain cases like liquidation, expropriation and others.
There are certain aspects about the distribution of dividends in Poland that need to be taken into consideration. Companies in Poland, including subsidiaries of foreign companies in Poland, must pay withholding taxes on dividends unless a double tax treaty applies.
Exit Tax
Exit tax regulations may potentially be important for investors.
Exit tax referred to as tax on unrealized profits and its rate is 19% on the tax base.
Income tax on unrealized profits covers:
- transfer of a component asset outside the territory of Poland, which results in the fact that Poland loses, entirely or in part, the right to tax the incomes from the sale of this component asset, whereas the component asset being transferred remains being owned by the same entity;
- change of tax residence by the taxpayer subject to tax liability in Poland regarding total incomes of this taxpayer (unlimited tax liability), which results in the fact that the Poland loses, entirely or in part, the right to tax the incomes from the sale of the component asset owned by this taxpayer, in relation to the transfer of the place of his seat or management office to another state.
The transfer of the component asset outside the territory of Poland, referred to above, applies particularly to the cases in which:
- a taxpayer with its registered seat in Poland transfers to its foreign establishment a component asset which has so far been related to the activity pursued in the territory of Poland;
- a taxpayer with its registered seat outside Poland transfers to the country of its tax residence or to a country other than Poland, in which it pursues activity via a foreign establishment, a component asset related so far to the activity pursued in the territory of Poland via the foreign establishment;
- a taxpayer with its registered seat outside Poland transfers activity, in whole or in part, pursued so far via a foreign establishment situated in the territory of Poland.
The income from unrealized profits (tax base) is the surplus of the market value of the component asset, determined as for the day of its transfer or as at the day preceding the day of change of the tax residence, in excess of its tax value.
The day of transferring the component asset outside the territory of Poland is the day preceding the day on which this component asset ceases to be assigned to the activity pursued in the territory of Poland, including via the foreign establishment.
For more information please contact
attorney Igor Bąkowski
tel. +48 22 633 67 66
or other lawyers from Bakowski Law Firm
bakowski.net.pl