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2024-04-09

New Obligation in the Accounting Act

Accounting Business Financial statement Regulations

On March 20, 2024, the Polish Parliament (Sejm) adopted an amendment to the Accounting Act, which implements Directive 2021/2101 of November 24, 2021. The provisions of the directive are part of a European Commission package aimed at combating tax avoidance by multinational enterprises. It is estimated that as a result of such practices, the EU loses between 50 to 70 billion euros annually.

The amendment introduces an obligation for large multinational enterprises to prepare reports disclosing information about income tax paid, as well as other tax-related information.

The data contained in these reports will need to be disclosed separately for all countries within the European Economic Area (EEA) where the enterprise operates, as well as with respect to so-called tax havens.

This obligation will apply to companies that have their registered office or place of management in Poland, as well as to enterprises outside the EEA that conduct business in Poland through a branch or subsidiary.

The regulation will particularly affect parent companies and independent units whose revenue in the last two consecutive fiscal years exceeds 3.5 billion PLN. This means that an entity will be subject to this reporting obligation even if it does not exceed the threshold in one of the following fiscal years.

The report will include, in particular, information on:

  • The name of the entity and a list of all subsidiaries included in the consolidated financial statements of the parent entity;

  • A description of the activities of the entities;

  • The number of employees, expressed in full-time equivalents;

  • Revenue, including from transactions with related parties;

  • The amount of income tax due for the fiscal year;

  • The amount of income tax paid during the fiscal year, including withholding tax;

  • The amount of undistributed profits from previous years.

It is important to note that the aforementioned data has already been provided by companies to tax authorities for some time, but it was not previously made public.

Entities will be required to prepare the report for the first time for the fiscal year starting after June 21, 2024. Statutory auditors will be responsible for verifying whether the entities comply with this obligation when auditing the financial statements.

This report will need to be submitted to the National Court Register and published on the company’s website, where it will be accessible for at least 5 years.

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