CJEU extends Polish CIT exemption to self-managed investment funds

On February 27, 2025 the CJEU delivered a pivotal judgement in a Polish case, stipulating that the requirement for external management constitutes a breach of EU law. The case concerned self-managed investment funds, which had been unable to benefit from the corporate income tax exemption. The judgement marks a significant shift for foreign investment funds operating in Poland. The Court extended the exemption, determining that the requirement of external management is incompatible with the principle of free movement of capital, thereby fundamentally changing the tax landscape.

The judgement will lead to several positive outcomes not only for tax system, but also for Poland’s investment market, as Marek Kończak and Tomasz Janik, MDDP experts, indicate. Foreign self-managed funds – previously excluded from tax benefits – will now find the Polish market considerably more accessible. Some will be able to reopen their tax proceedings, and others that have not yet filed for refunds can now claim their rights based on the judgement. Tax refunds with interest could be substantial, in some cases with interest exceeding even 50% of the collected tax.

Our experts also outline long-term consequences for the Polish investment landscape:

“This development may lead to several positive outcomes. Capital inflows may increase as more diverse fund structures enter the market. This in turn could lead to enhanced competitiveness of Poland as an investment destination. The judgment could also contribute to a closer alignment between Polish tax regulations and EU principles.

This judgment effectively resolves long-standing disputes in the Polish tax landscape, forcing authorities to adopt a more inclusive approach towards foreign investment vehicles. For funds that have historically faced challenges with Polish tax exemptions, this represents both an opportunity for tax refunds and a gateway to new investment possibilities in the Polish market”.

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#MORE in International Tax Review >> https://www.internationaltaxreview.com/article/2eib5e3el03biootu8i68/sponsored/cjeu-extends-polish-cit-exemption-to-self-managed-investment-funds.