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Business in Poland

Law, tax and banking. Chapter 6

    • 6.7.


      • 6.7.1.

        Bank financing

Most Polish banks offer a wide range of financing products for corporate cus- tomers, such as

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    Overdraft facilities,

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    Short-term loans,

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    Investment loans and project finance,

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The customer is usually asked to specify and explain the objective for the funding required. In addition, the customer is asked to provide collateral for the credit facility.

Short-term funding is essentially obtained through bank overdrafts. Rates vary but are all based on the Warsaw Interbank Offered Rate (WIBOR). Leasing and factoring are available.

6.7.2. Inter-company funding

Tax on inter-company loan applies to all intra-group loans and currently levels at 2% of the loan amount. However, if a loan is granted by the direct shareholder of the borrower, is provided by the foreign company, if this company s activity is to grant loans, or is meant for starting up or continuing the core business activity of the company, such a loan is exempt from tax on civil act transactions.

Additionally, inter-company loans have to observe thin capitalisation and transfer pricing requirements.

Under Polish transfer pricing rules, transactions between related entities should be concluded taking into account the arm s length principle i.e. at prices which would have been set in this given type of transactions between unrelated com-


Based on the Polish thin capitalisation rules, interest paid on certain loans/credits drawn from qualified lenders (specifically related entities) cannot be recognised as a fully tax deductible cost. The part of interest paid on such restricted loans/credits is not deductible for corporate income tax purposes in relation to the part of the Polish entity s total debt to specific companies exceed- ing three times the value of the share capital. The term loan includes also the issue of bonds and other debt instruments as well as deposits.

A qualified lender is defined as:

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    a shareholder holding at least 25% of the debtor s shares,

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    two or more shareholders holding together at least 25% of the debtor s shares,

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    sister companies, if the same shareholder holds at least 25% of the shares in the creditor and the debtor company.

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


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