Polish thin capitalization regulations increase the tax charge on businesses using debt capital.
The Corporate Income Tax Act was amended early last year with respect to thin capitalization rules in order to implement Council Directive (EU) 2016/1164 designed to prevent tax avoidance. Ever since the effective date of the new rules, their interpretation and application has been riddled with problems and continues to generate plenty of disputes with tax authorities. A chance appeared recently to resolve the dispute as to the calculation of exceeding borrowing costs. But this will not be the end of the bumpy road for taxpayers as controversies arise also about what the new law treats as borrowing costs.
For the full text of the article by tax consultant Michał Kordiak, see Rzeczpospolita on-line, Dobra Firma weekly, or here.