Tax capital groups (TCGs)

A tax capital group (a group of companies settling CIT on a joint basis) has recently been more and more attractive as a fully safe and compliant solution allowing the effective tax rate to be reduced at the capital group level.

• CGs may be established by a group of at least two companies which are Polish tax residents
• The parent company in a TCG must hold at least 75% of the shares in the subsidiaries
• Average share capital per company is also required to amount to PLN 500,000 (PLN 250,000 as of 2022)
• At the moment of establishing a TCG the companies must not have any tax arrears.

• The possibility of consolidating the taxable result in CIT at the group level – particularly attractive in the event of some entities within the group being profitable, while others recording tax losses.
• A number of specific regulations, e.g. with respect to limits on costs of debt financing and costs of intangible services purchased within the TCG.
• Exemption of intra-group transactions from the obligation to prepare local transfer pricing documentation.

We provide capital groups with comprehensive support, both at the stage of analysing the feasibility of implementing a TCG, the assessment of consequences, benefits and risks, and at the stage of registration and operation of the TCG.

• We will prepare the feasibility study
  • We will assess the possibilities of meeting the formal criteria by the group – we will indicate the entities that would be eligible to establish a TCG
  • We will assess the benefits and possible tax and financial risks of operating within a TCG
  • We will calculate of the impact of establishing a TCG on the effective tax rate in the group – based on the forecasted results for the following years
  • We will provide recommendations as to the operation model of a TCG, the entities that should be covered by it, as well as the practical mechanism of settlements after the establishment of the TCG

• We will provide implementation support
  • We will prepare the documents necessary to establish/renew a TCG
  • We will represent the companies establishing a TCG in front of the head of the relevant tax office in matters related to the establishment of the TCG or its renewal
  • We will draft internal documentation related to operation within a TCG

• We will advise on the operation of a TCG
  • We will provide ongoing tax advice on issues specific to a TCG
  • Where necessary, we will apply for advance tax rulings for regulations related to operation within a TCG.