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Business in Poland

Law, tax and banking. Chapter 6

6.6.2. Cash Concentration

As in other markets the most straight-forward cash pooling product, zero- balancing, is the preferring solution for optimising liquidity. However, as already mentioned above, establishment of zero-balancing cash pool in Poland may re- sult in potential risks, both to the participants in the structure and to the bank. Therefore the cash pool agreement must to the extent possible comply with sev- eral regulations, relating especially to tax on civil act transactions and transfer pricing rules. Although the legal concept of the particular agreement can mini- mise the above mentioned risks, it is always based on the interpretation of the existing law, therefore it cannot be guaranteed that the assumptions made would not be questioned by any authority. The bank offering cash pooling solutions usu- ally have obtained legal opinions from the legal and tax advisors, however regard- less of that an additional opinion should always be sought.

6.6.3. Intra-Group Netting

Group netting in Poland was not easy to establish in the past due to strict For- eign Exchange Law - the company intending to implement such a solution was required to obtain an individual permission from The National Bank of Poland. It was probably the reason why most of the international groups decided not to enter into group netting agreement with their Polish subsidiaries. As the F/X law has been recently eased, no special permission is required any- more. However, all payments between residents and non-residents exceeding EUR 10,000 are still subject to control of a payment title. In case of transfers related to netting settlement, the following documents need to be delivered to the bank:

  • -

    group netting agreement, stipulating the entity acting as the netting centre,

counterparties of netting transactions, settlement dates (frequency) etc.

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    monthly statement comprising the net amount calculation.

In addition to the requirements described above, the Polish company participat- ing in group netting is obliged to report the netting transactions to the National Bank of Poland. First, the company has to inform NBP within 20 days after the netting agreement has been signed. For this purpose a special form, containing the basic information on the agreement, should be completed. Additionally, such a company is obliged to report the netting transactions on a quarterly basis (the report must be presented within 20 days after the end of each quarter). If the total amount of the transactions that have been set off during a calendar quarter is equal to or higher than EUR 100,000, all the receivables/payables used for netting calculations need to be quarterly reported as well.

Introduction if intra-group netting may result in potential tax implications as far as tax-deductible costs are concerned. This issue should be then investigated before group netting agreement has been concluded.

Danske Bank / KPMG / Mazanti-Andersen, Korsø Jensen & Partnere January 2006


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