Tax Capital Group

What is going to change?

The Tax Capital Group (TCG) is one of the available instruments of tax consolidation for groups of companies.

The current regulations allow to consolidate the tax results of companies forming TCG, simultaneously imposing conditions on the group itself regarding entering the TCG regime and remaining in it.

The Polish Deal liberalizes some of these conditions, making TCG an interesting alternative to the tax operation for groups of companies.

Pursuant to the current regulations, TCG may be established by limited liability companies, joint-stock companies and simple joint-stock companies. The requirement is, inter alia, that one of the companies (the parent company) holds directly at least 75% of shares in the remaining companies (the subsidiaries). The TCG need to be set for at least three tax years based on the agreement concluded by the companies and registered by the head of the tax office.

TCG can be used by taxpayers who settle accounts according to the standard 19% CIT rate and who do not benefit from “zone” exemptions / decisions on support within the Polish Investment Zone.

After the change introduced by the Polish Deal:

the average share capital of the companies forming the group cannot be lower than PLN 250 000 (c.a. EUR 55k) (currently: PLN 500 000)
there will be no obligation to maintain the so-called profitability ratio (currently: there is a requirement for TCG to maintain a 2% profitability ratio)

TCG agreement may be concluded in writing (currently: a notarial deed)
it will be allowed to reorganize within the TCG to a certain extent

What does it mean?

The undoubted advantage of TCG is the possibility of compensating tax losses incurred by the company / companies operating within the TCG with income generated by other entities from this group. Thus, the inclusion of the group under the TCG regime may significantly reduce the effective CIT rate.

How can we help?

Based on our previous experience, we can analyze the existing structure of the capital group / companies operating in it, identify issues requiring management and guide the entities through the process of implementing the TCG, in particular:

conduct a feasibility study – advise whether it is possible to use the TCG regime or what conditions would have to be met in order to take advantage of it;
advise on the safest approach to be adopted in relation to particular aspects of running a business within TCG;
support in the preparation of the TCG agreement and the process of its application to the tax office;
prepare appropriate tax calculations.

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