Income Tax Report – new obligation

The Act amending the Accounting Act and certain other acts has been submitted to the President’s desk. It introduces an obligation to prepare and publish income tax reports. It is an implementation of the 2021/2101 Directive.

Who is subject to the obligation

This obligation is to apply, under certain conditions:

• ultimate parent companies (preparing consolidated financial statements) if the income in the annual consolidated financial statements of that entity exceed PLN 3.5 billion for each of the last two financial years, or
• singular entities, if the income in the annual financial statements of this entity exceed PLN 3.5 billion for each of the last two financial years;
• certain subsidiaries controlled by EEA ultimate parent companies with income exceeding €750 million for each of the last 2 financial years;
• branches which, for each of the last 2 financial years, exceed the amount of income of PLN 51 million established by EEA entities whose income for each of the last 2 financial years exceed the amount of EUR 750 million.

In practice, two value thresholds are important:

• PLN 3.5 billion – singular entities from EEA, capital groups with a parent company from EEA;
• EUR 750 million – capital groups with a parent company from outside the EEA.

If the parent company is based in the EEA, it will be responsible for reporting.

On the other hand, in the case of non-EEA parent companies, Polish subsidiaries may be required to report, provided that in the last two financial years they have exceeded at least two of the following three figures:

• PLN 25,500,000 – for the total assets of the balance sheet at the end of the financial year;
• PLN 51,000,000 – in the case of net income from the sale of goods and products for the financial year;
• 50 people – in the case of average annual employment in full-time equivalents.

However, if the non-EEA parent company reports in a standard similar to the EU and the report is submitted to the relevant EU register, this obligation will not arise.

Responsibilities

To put it simply, it will include:

• preparation of income tax reports;
• make it public on the entity’s website (for at least 5 years);
• submission to the National Court Register.

These provisions are to apply for the first time to the income tax report for the financial year beginning after 21 June 2024.

Content of the report

The report is to include information on the entire activities of the singular or ultimate parent company, including the activities of all subsidiaries included in the consolidated financial statements of the ultimate parent company for a given financial year.

At the same time, the income tax report contains, among others, the following information:

1. the name of the ultimate parent undertaking or stand-alone undertaking and a list of the subsidiaries specified in the
2. financial year;
3. the currency of presentation of the income tax report;
4. a brief description of the nature of the entities’ activities;
5. number of full-time equivalent employees;
6. income, including from transactions with related parties, determined according to a specific methodology;
7. the amount of profit or loss before tax;
8. the amount of income tax due in a given financial year that is the current tax burden on taxable gains or losses in the financial year recognized by entities and branches in a given tax jurisdiction, excluding deferred tax and provisions for contingent tax liabilities;
9. the amount of income tax paid in a given financial year by entities and branches in a given tax jurisdiction, including the amount of withholding tax paid by other entities in respect of payments to entities and branches within the group;
10. the amount of undistributed profit from previous years at the end of a given financial year, including the amount of profit from previous financial years and the amount of profit from a given financial year for which no decision has been made on distribution, whereby in the case of branches, undistributed profit from previous years means the undistributed profit from previous years of the entity that established the branch;
11. that the report has been drawn up in accordance with points 1 to 10.