On 31 October 2016, a group of Parliamentary Members belonging to the governing party – Law and Justice – filed a draft bill with the Polish Parliament proposing significant changes to the taxation of Polish and foreign investment funds.


Up to now, all Polish investment funds – open-ended and closed-ended – as well as their equivalents from the European Union or the European Economic Area Member States have been fully exempt from Polish taxation on all types of profits derived in Poland. The exemption covers income tax, capital gains tax and withholding tax.

It is proposed…

According to the draft bill, this exemption will be cancelled. Instead, the draft bill proposes to exempt from Polish taxation only certain types of profits derived by open-ended funds only or by their equivalents from the European Union or the European Economic Area Member States. The exemption would cover only the following types of profits:

  • interest
  • dividends and dividend-like distributions
  • capital gains from the sale of receivables, shares and stocks as well as other securities, including derivative financial instruments and foreign exchange gains.

Other types of profits that may be derived by the funds, e.g. profits from real estate, would not be covered by the exemption.

Also, the exemption will not apply to funds from the European Union or the European Economic Area Member States which operate as closed-end funds or units which are not listed or offered publicly.

Polish withholding tax would not be imposed on distributions to foreign funds eligible for the exemption only if they are able to present a certificate confirming their tax residency in the European Union or the European Economic Area Member States and to represent that they are the beneficial owners of the received profits.

The new rules would fully exclude from tax exemption all closed-end investment funds from Poland and abroad (including so-called Polish FIZ or FIZAN).

The goal …

The authors directly state in the bill’s justification that the proposed changes target tax optimization schemes involving Polish closed-end investment funds (so called Polish FIZ or FIZAN) being part of the chain of tax transparent vehicles, including Luxembourg special limited partnerships – SCSp. According to the authors, due to such structures, the Polish state budget may lose even PLN 2-2.5 billion because of unpaid income and capital gains tax.

Coming into force...

It is proposed that the changes will come into force on 1 January 2017.

Further procedure…

The draft bill is going to be subject to verification of its compliance with European Union laws and will be considered by the parliamentary legislation office, which will analyze its economic and social impact.

Impact …

The proposed changes may have a significant impact on the return rates of all investment funds – Polish and foreign – which operate as closed-end funds or invest in alternative types of assets not covered by the new tax exemption (e.g. in real estate). All profits of such funds derived from Poland would become subject to Polish taxation at the 19% rate.

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