GloBE Act signed by the President of Poland

On 15 November this year the President of Poland signed the Act of 6 November 2024 on the top-up tax of constituent entities of multinational and domestic groups! The Act will soon be promulgated in the Polish Journal of Laws.

The Act of 6 November 2024 on the top-up tax of constituent entities of multinational and domestic groups [here: the GloBE Act] implements into the Polish legal system the requirements of Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union [the Directive]. The Directive should have been implemented into the domestic legal systems of the EU Member States effectively from 1 January 2024. Poland (as well as only Spain, Portugal and Cyprus) failed to implement the Directive in time, and therefore the provisions of the GloBE Act should be effective, in principle, from 1 January 2025.

Under the GloBE Act, entities belonging to multinational and domestic groups – with consolidated revenues exceeding €750 million in at least 2 of the 4 years preceding the tax year – will be required to calculate an effective tax rate, report a range of data and possibly pay a top-up tax, most often in their country of residence.

The GloBE Act regulates taxation wit:

• global top-up tax;
• domestic top-up tax;
• top-up tax on under-taxed profits.

The wording of the GloBE Act also sets out, among other things, how the principles governing the GloBE system are to be applied:

• Income inclusion rule (IIR),
• Undertaxed Profits Rule (UTPR),
• Qualified Domestic Minimum Top-Up Tax (QDMTT).

Selected issues arising from the GloBE Act are discussed in this alert.

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This Tax Alert does not constitute legal or tax advice. MDDP Michalik Dłuska Dziedzic i Partnerzy spółka doradztwa podatkowego spółka akcyjna is not responsible for the use of the information contained in the Alert without prior consultation with legal or tax advisers.