On 14 August 2023 in the Journal of Laws of the Republic of Poland was published an ordinance of the Minister of Finance amending the ordinance on the postponement of the deadline for the payment of personal income tax by taxpayers of the tax due on income from unrealized profits (Journal of Laws of 2023, item 1611).
The regulation enters into force on 29 August 2023 and extends the deadline for paying tax by 2 years. It is worth noting, however, that the postponement of tax payment deadlines still only temporarily solves the issue of poorly drafted provisions on the taxation of unrealized profits.
Tax on unrealized profits, so-called exit tax, has been in force in Poland since 2019.
The key assumption of the exit tax is the taxation of unrealized profits in connection with:
- transfer of an asset outside of Poland, as a result of which Poland loses the right to tax income from the sale of that asset, while the transferred asset remains the property of the same entity;
- change of tax residency by a Polish tax resident, as a result of which Poland loses the right to tax income from the sale of an asset owned by that taxpayer in connection with the transfer of his/her place of residence to another country.
Exit tax applies only to transfers whose total market value exceeds PLN 4 million. The tax rate of tax on unrealized profits is 19% and 3%. The lower rate applies when the tax value is not determined for the asset.
The deadlines for paying tax due on income from unrealized profits have been extended once again:
- by the 7th day of the month following the month in which the taxpayer lost, in whole or in part, an asset subject to this tax - if the loss of all or part of this asset occurred before December 1, 2025 (the earlier extension applied only to assets for which the loss of taxation rights occurred before 1 December 2023); and
- by 31 December 2025 - in other cases.
The extension of the deadline applies to the tax due on income from unrealized profits resulting from monthly declarations submitted for settlement periods from 1 January 2019 to 30 November 2025.
The above change was long awaited and we assess its entry into force positively, considering that currently the tax on unrealized profits is accused of non-compliance with EU-law, among others due to the mechanism of immediate tax collection, which is in conflict, in particular, with the freedom of movement of persons, such as the judgment of the CJEU of 26 February 2019, ref. no. act C-581/17. It is worth noting, however, that the postponement of tax payment deadlines still only temporarily solves the issue of poorly drafted provisions on the taxation of unrealized profits.
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