Background

The regulations concerning the top-up taxation of constituent entities of multinational and domestic groups (so‑called Pillar 2) entered into force on 1 January 2025. These rules form part of the OECD’s global tax reform and are intended to ensure that large corporate groups are effectively taxed in each jurisdiction at a minimum level of 15%.

Poland was required to implement the Pillar 2 regulations as of 1 January 2024; however, the provisions were ultimately introduced with a one-year delay. This means that tax settlements under Pillar 2 in Poland will, as a rule, be mandatory for the first time only for the year 2025.

What, then, about 2024? The legislator has provided for a specific option to voluntarily apply the Pillar 2 rules already from 1 January 2024.

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Voluntary application of Pillar 2 from 2024 – what does it involve?

Groups operating in Poland may voluntarily opt to apply the top-up tax provisions for the year 2024. In such a case, the Pillar 2 rules are applied as if the legislation had already been in force from 1 January 2024.

This solution is entirely optional; however, it should be stressed that once the election for early application of the Pillar 2 rules is made, it is irrevocable – the taxpayer cannot revert to the regime applicable from 2025.

In order to effectively benefit from this option, an appropriate declaration must be submitted in the form of a notarised deed.

The declaration must be filed between 1 March 2026 and 30 May 2026. As at the date of publication of this article, this leaves very little time for interested parties – barely two weeks.

As a rule, the entity obliged to submit the declaration is the ultimate parent entity (UPE), provided that it has its registered office or place of management in Poland. If the UPE is located outside Poland, the declaration is submitted by all Polish constituent entities of the group, subject to obtaining the consent of the parent entity.

Benefits of retroactive application of Pillar 2 – is it worth it?

A decision to subject the group to the Pillar 2 regime at an earlier stage entails a number of significant consequences. In particular, it means the need to prepare the relevant financial data, perform tax calculations, and fulfil compliance obligations (including filing returns and information on the top-up tax) already for the 2024 tax year.

Are there any benefits that could offset these additional (and, importantly, voluntarily assumed) obligations? The explanatory memorandum to the draft act provides limited guidance in this respect. Nevertheless, one possible rationale for voluntary application of Pillar 2 is to introduce a certain simplification for Polish accounting teams. Where a foreign UPE within the group is already subject to Pillar 2, it is required to calculate the effective tax rate (ETR) and the top-up tax for each jurisdiction, including Poland. Polish accounting teams may therefore already be involved in this calculation process based on foreign rules (for group purposes rather than vis-à-vis the Polish tax authorities). Opting into the voluntary Pillar 2 regime for 2024 in Poland would result in the tax being calculated under Polish rules instead.

A second potential benefit is linked to the requirement under Pillar 2 for a group to file a GloBE Information Return (GIR) in a single selected jurisdiction in which the group operates. In the remaining jurisdictions, it is generally sufficient to submit a notification that the GIR has been filed in that other country, with the GIR subsequently subject to automatic exchange between tax authorities. In this context, a group may consider in which jurisdiction filing the GIR would be most cost-effective, particularly from the perspective of advisory involvement. If Poland were chosen, extending the application of the regulations to include 2024 could have a sound business rationale.

Notwithstanding the above, we encourage you to contact us both with respect to Pillar 2 for 2024 and 2025 – in this area, we provide comprehensive support to our clients.

Read the Polish version of this article: Wsteczne stosowanie Pillar 2 za rok 2024 – o co w tym chodzi i czy warto? - CRIDO