End of Open-Ended Tax Rulings in Poland? Key Changes for M&A
Poland's Ministry of Finance is working on a draft act (UD445) that may fundamentally change how protection under individual tax rulings operates – and, consequently, how it is factored into transactions.
What changes are planned?
The core assumption of the draft is the introduction of a five-year validity period for individual tax rulings, with the possibility of earlier expiry by operation of law if the underlying provisions are amended.
The changes are also set to affect withholding tax (WHT) preference opinions, whose validity period would be extended from the current 36 months to 5 years. The draft also provides for the option to renew the validity of rulings and WHT opinions for further five-year periods, using a tacit approval mechanism.
What does this mean in practice?
Individual tax rulings will no longer function as open-ended protective instruments. In practice, this will require:
- monitoring the expiry dates of existing rulings and WHT opinions,
- making timely decisions on renewing protection,
- reviewing and organising ruling portfolios – particularly in larger organisations.
Impact on M&A transactions and tax due diligence
Individual tax rulings and WHT opinions frequently serve as the basis for assessing the safety of specific settlement models in M&A transactions. The proposed changes will reshape one of the fundamental questions in tax due diligence. Alongside “Does the company hold tax protection instruments?”, a new question will emerge: “Will the protection under existing instruments remain valid after the transaction, and for how long will it cover the adopted business model?”
In key areas – such as cross-border flows, financing, and holding structures – the status of rulings and WHT opinions may become a component of tax risk assessment, post-acquisition planning, and, in the transaction process itself, a subject of negotiation.
Time to act now
The ultimate impact of the changes will depend on the final wording of the legislation, which may still evolve during the legislative process. Even so, it is worth looking at existing rulings and WHT opinions not only as protective instruments, but also as elements of a tax portfolio that deserve active management.
Are you preparing a company for sale, running an M&A process, or basing dividend payments and intra-group financing on a tax ruling or WHT opinion? We are happy to review the status of these instruments within your specific structure and assess what this means for your next distribution or transaction timeline.
Contact: Aleksandra Potocka, Aleksandra Kodłubaj, Adrian Celiński, Duszan Wolczyński