8 February 2016
Banking & Finance,
Tax
Poland: Wealth tax on bank and insurance assets
effective from 1 February 2016
Gregor Paul Ordon, Adrian Jonca
On 15 January 2016, the Polish parliament passed a law on the taxation of wealth
of certain financial institutions. The new law came into effect on 1 February 2016.
At the same time, the legislator decreed that this new wealth tax will not affect the terms and conditions
governing the rendering of financial and insurance services under contracts concluded prior to 1
February 2016.
The basic characteristics of the new law are as follows:
Taxable persons
The following providers of financial services are subject to taxation:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Banks based in Poland;
Branches of foreign banks from non-EU countries;
Branches of financial institutions in terms of EU regulation No 575/2013 (branches of EU banks);
Cooperative savings and credit institutions based in Poland;
Insurance companies based in Poland;
Reinsurance companies based in Poland;
Polish branch offices and other fixed places of business of foreign insurance companies and foreign
reinsurance companies from EU countries;
Polish head offices of foreign insurance companies and foreign reinsurance companies from nonEU countries;
Consumer credit providers that are not: banks, financial institutions, their branches, cooperative
savings and credit institutions as well as other suppliers who offer instalment payments to
consumers.
State banks and institutions undergoing administration procedures as well as taxpayers under the
special supervision of the regulator are exempt from this wealth tax.
Applicable tax rate
The wealth tax is a monthly tax. This charge does not constitute an operating cost for corporate income
th
tax purposes. It should be assessed by the taxpayer itself and paid to the tax office by the 25 of the
following month for the preceding month. The monthly tax rate is 0.0366% (0.44% p.a.) of the monthly
taxation base.
Taxable base
The taxable base is determined separately for each month. The taxable base is the sum of assets
according to the lists of current totals and account balances valid at the end of the relevant month. Only
Poland: Wealth tax on bank and insurance assets
effective from 1 February 2016
the asset base valid at the end of the month will apply. In this respect the records of the general ledger
accounts under accounting law are decisive.
Separate tax allowances can be set before the tax is calculated. The net worth tax allowance for the
groups of persons under points 1 to 4 is 4 billion PLN. For the taxpayers under points 5 to 8 an
allowance of 2 billion PLN is applicable. However, an allowance of 200 million PLN will apply for
consumer credit providers. Economically or otherwise dependent entities will be added together[joined?]
in order to determine their allowance.
The taxable base on the particular reporting date can be further reduced by the sum of capital resources
(core capital, supplementary capital) for the institutions under points 1 to 3. A similar rule applies to
cooperative savings and credit institutions. Cooperative banks may also deduct financial resources on
all accounts of the affiliated cooperative banks.
The institutions under points 1 to 4 are further permitted to deduct amounts that were paid for the
strengthening of equity capital in fulfilment of regulatory provisions. Moreover, these institutions can
reduce the taxable base by the value of any treasury bonds of the Republic of Poland held at the end of
the relevant month. Decisive here is the portfolio of treasury bonds held on the respective last day of the
month.
Additional notes
The law was introduced in order to finance specific social goals of the government and is aimed at the
market participants listed above.
Banking assets of foreign banks and insurance companies (with no branch offices in Poland) that
consist of, for example, foreign loans to Polish debtors, are not affected. This applies in particular for the
direct granting of loans from foreign banks to Poland. Also exempt from the tax obligation are brokerage
companies, leasing companies or factoring companies based in or with branch offices in Poland.
Securitisation funds or investment funds are also not included in the group of taxpayers. The legislator
further decided to exempt state banks from the wealth tax. Finally, the net wealth tax will only be
determined based on the list of assets valid at the end of the relevant month (the amount and
composition of the company assets and equity capital between the due dates is irrelevant).
Ambiguities
The law was passed hurriedly and is not free from significant questions of interpretation. Among other
things, uncertainties exist with regard to the question as to which equity capital can be deducted by a
branch office, as the branch office as a non-legal entity, does not possess any equity capital
independently from the head office. Further, it is not clear whether the taxable base can be decreased
by statutory value adjustments and current value depreciation of the assets applicable to banks and
insurance companies, as the taxable base for the wealth tax is based on the list of current totals and
account balances which also demonstrates the historical amounts of the initial values of assets. At the
same time, this raises the question whether the taxpayer calculating the value of its assets not only
pursuant to Polish accounting law but also in accordance with IFRS can explicitly choose the relevant
accounting principles. This issue is of particular significance in case these two sets of rules provide for
discrepant evaluation criteria of such assets as securities, financial instruments or beneficial ownership
of assets. One of the consequences of charging the assets in the current form is also that assets serving
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Poland: Wealth tax on bank and insurance assets
effective from 1 February 2016
solely for billing purposes (e.g. active deferred charges or latent taxes) are subject to the wealth tax. If
the taxpayer in addition is also the owner of real estate, these assets will be subject to both real estate
and wealth tax. Double taxation with the wealth tax is also possible in case the bank subject to the
wealth tax finances another bank (e.g. a mortgage bank).
Economic Implications
It is certain that the newly introduced wealth tax will have serious economic repercussions. As this
charge cannot be qualified as an operating cost, nor can it be the reason for changing the terms and
conditions of rendering financial or insurance services, it can only negatively affect the interest margin or
the profit of the given entity. Therefore, it can be assumed that direct lending from abroad by foreign
banks will become more advantageous. Credit institutions being hit with the highest wealth tax rate in
Europe can also adversely impact the attractiveness of low-margin (and thus safe) financial instruments
and promote financial products from higher risk categories, Polish treasury bonds or off balance sheet
assets. Furthermore, the regulation does not take into account the specifics of the bank and insurance
sector (in particular in the area of life insurance) and charges both sectors equally, as well as applies the
same tax rate to different risk categories of assets.
The implementation of this new regulation together with the general administrative approach in the
coming months will demonstrate whether the new tax meets the envisaged objectives.
Authors:
Gregor Paul Ordon
gregor.ordon@klgates.com
+48 22 653 42 69
Adrian Jonca
adrian.jonca@klgates.com
+48 22 653 42 58
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Poland: Wealth tax on bank and insurance assets
effective from 1 February 2016
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