The solution, widely known as an investment agreement, has so far not been used in Polish tax law. However, it was previously announced by the Ministry of Finance as Interpretation 590. According to the official rationale, this project is designed to enable entrepreneurs and investors to accurately determine the tax consequences, as well as to plan the strategy in the most efficient way before the investment is made. The conclusion of such an agreement has a much greater protective power than the preparation of individual interpretations. At the same time, the agreement encourages a potential investor to commit his capital.
The investment agreement entered into force on January 1, 2022. The Tax Ordinance Act defines a very broad definition of an investor. According to the official understanding, it can be any entity that is planning or has started an investment in Poland. There are no restrictions as to the type of legal form or registered office in this case. In addition, an investor can also become a foreign entity wishing to make an investment in the Republic of Poland. The only limitation that applies to entrepreneurs under the investment agreement is the maximum investment value. It must be at least 50 million PLN – which in turn suggests that such a solution is predetermined for really large and important market operations.
What is included in the investment agreement?
The Investment Agreement is a comprehensive document intended to supersede many individual interpretations and protective opinions. The declaration thus established above all raises essential questions such as the assessment of the conformity of the transfer price of the controlled transaction with market conditions, the analysis of the tax advantages indicated in the application for the conclusion of an investment, the agreement , the precise description and classification (also in the Combined Nomenclature) of the goods or services, and the appropriate tax rate, as well as the exact interpretation of the provisions of the tax legislation.
It should also be borne in mind that the investment agreement is a bilateral agreement. This means that the investor and the other party (the Ministry of Finance) can refuse to enter into such an agreement in any case. Once the entrepreneur has submitted an appropriate signature, he also has the option of issuing a notice of termination at any time. On the other hand, the tax administration can only do so in specific cases. One of the main reasons is the evolution of case law. This raises a lot of controversy and uncertainty among investors, because Polish tax law is one of the most complex, and therefore case law is also dynamically changing, which may be grounds for termination of contracts in the future. to the detriment of investors.
What are the advantages of such an agreement?
The main advantage of entering into an investment agreement is that the investor gets complete data on the tax consequences of the investment. Its objective is to guarantee the entity as complete an explanation as possible of all the tax consequences of the investment, in particular in the context of:
- individual interpretation;
- prior agreement on prices;
- investment security advice;
- information on the rate of consolidation and excise duties.
Moreover, the content of the agreement itself is intended to bind the tax authorities for the accounting periods covered by this agreement. The contract must be valid for the exact period agreed therein – however, it cannot be longer than 5 years tax. However, it is possible to extend or shorten the duration of an investment agreement, which automatically expires on the date of entry into force of the tax law, insofar as the agreement has become incompatible with the provisions. If, in such a situation, the declaration is not modified within a period of less than 30 days, a tax procedure is initiated and corresponding late payment interest is charged.
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Investment agreement – formalities
The conclusion of an investment contract, at the request of the investor, must contain accurate information about his data. It is necessary to describe the investment, the declared value of such a business, the proposed subject of the agreement and its term of validity. In addition, investors must pay two types of claims. The initial fee (which is the application fee) is 50,000 PLN. zloty. In turn, the very conclusion of the agreement must be subject to another main fee, which amounts to 100,000 PLN. and 500 thousand PLN (no more). The investor must carry out the transactions resulting from the conclusion of the contract within a period of at least 30 days.
The new project to conclude an investment agreement, introduced in the tax ordinance under the Polish ordinance, can certainly be assessed positively for the possibility of defining comprehensive conditions, effects and tax consequences related to an investment future. On the other hand, such a solution raises certain concerns in connection with the terms of termination of the contract and because only the most important economic entities can benefit from such a prepared agreement.