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Top-up tax

TLA Kancelaria > Specializations > Top-up tax
Top-up taxation
Verifier
How can we help?
Guide
Do you submit the CbC-P every year for the previous year?

Know, therefore, that your Company may be subject to the top-up tax system – verify whether and which taxes under the GloBE system (IIR, QDMTT, UTPR) will apply to the entity located in Poland.

Top-up taxation – when does it come into effect?

The Act on Top-up Taxation of Constituent Entities of International and Domestic Groups (hereinafter: the Act), i.e. groups that have achieved annual consolidated revenues of at least EUR 750 million in at least two of the four tax years preceding the examined tax year, entered into force on January 1, 2025.

The provisions allow taxpayers to voluntarily apply the Act already to the tax year beginning after December 31, 2023, i.e. in principle already for 2024 (the group’s decision to opt for this solution may be made between March 1, 2026, and May 30, 2026).

What is the purpose of the Act?

The purpose of the Act is to implement into the Polish tax system the top-up taxation provided for in Council Directive (EU) 2022/2523 of December 14, 2022, under which enterprises with consolidated accounting revenues equal to or exceeding EUR 750 million in at least two of the four tax years preceding the examined tax year will be required to pay a top-up tax if their effective tax rate (ETR), calculated under the new rules, is lower than 15%.

Top-up tax verifier

Top-up taxation in Poland will consist of three taxes:

  • Global Top-up Tax (IIR),
  •  Qualified Domestic Minimum Top-up Tax (QDMTT),
  •  Undertaxed Profits Top-up Tax (UTPR).
Safe harbours

The Act provides for measures aimed at reducing the burdens associated with the application of the new provisions, intended to simplify procedures.

These measures, referred to as safe harbours, may be either permanent or temporary.

The safe harbours include:

  • de minimis exclusion,

  • the so-called safe harbour for the Qualified Domestic Minimum Top-up Tax (QDMTT safe harbour),

  • safe harbour for constituent entities with low material financial results,

  • safe harbours applicable during the initial period of a group’s activity,

  • temporary CbCR safe harbour.

 

CbCR Safe Harbour

Particular attention, in the initial period of being subject to top-up tax obligations, should be paid to the temporary CbCR safe harbour.

 

Why should you be interested in the CbCR safe harbour?

The simplification assumes that:

  • calculations will be based on financial data from the CbCR,
  • rather than on a separate, complicated income tax calculation according to the rules provided in the Act (benefit in the form of simplified calculations).
  • If any of the conditions for using the safe harbour are met, it is assumed that the top-up tax is 0.

CbCR safe harbour:

  • will apply provided the option to use it is selected,
  • will apply for one tax year (however, this choice can apply to tax years starting no later than December 31, 2026, and ending no later than June 30, 2028),
  • assumes the fulfillment of at least one of the tests (routine profits test, de minimis test, simplified effective tax rate test).

In the first step, taxpayers should identify the obligations imposed by the Act and whether they can apply the CbCR safe harbour.

 

How can we help?
  • Determining whether the group is required to apply the Act (including the possibility of applying the Act for 2024).
  • Providing support in determining which top-up taxes (IIR, QDMTT, UTPR) apply to the group’s companies located in Poland.
  • Identifying whether temporary/permanent safe harbours specified in the Act apply to the group’s companies located in Poland.– De minimis;
    – Safe harbour in the initial period of the group’s activity;
    – Temporary CbCR safe harbour;
  • Determining what choices the Company can make (by when and for how long).
  • Providing support in the calculation of:– Support in calculating the ETR (effective tax rate) for the group’s companies located in Poland, including assessing the possibility of applying the safe harbour for constituent entities with low material financial results;
    – Assistance in calculating the top-up taxes, including the possibility of applying safe harbours:
    - QDMTT safe harbour (the possibility of excluding the global top-up tax for the domestic top-up tax for foreign jurisdictions);
    - Temporary safe harbour for the top-up tax on undertaxed profits.
  • Determining reporting obligations (declarations, statements, deadlines):– Preparation of information on top-up taxation for the tax year;
    – Preparation of the statement on the amount of the due tax

If you are interested in support regarding top-up taxation, we encourage you to contact us.