Taxation of loan to a Polish LLC

 Granting a loan by an EU-based shareholder to a Polish limited liability company (sp. z o.o.) is a common form of financing, but it comes with specific tax implications.

•  Withholding tax (WHT):

Interest payments are subject to WHT in Poland (19% for individuals, 20% for companies). However, reduced rates or even full exemptions may apply under double tax treaties or the EU Interest & Royalties Directive, provided that conditions such as minimum shareholding, two-year holding period, and “beneficial owner” status are met.

•  CIT deductibility:

Interest can generally be deducted as a cost in Poland, subject to ATAD limitations (30% of EBITDA or PLN 3 million threshold) and transfer pricing rules. The Ministry of Finance provides safe harbour margins for related-party loans.

•  PCC / VAT:

Loans granted by shareholders to their company are exempt from PCC. Granting loans is also VAT-exempt as a financial service.

This structure can be tax-efficient, but careful documentation and compliance with WHT procedures are crucial.

Required documents:

• Certificate of tax residence of the lender
• Beneficial owner statement
• Loan agreement (with market-based terms)

Please note: The above does not constitute legal or tax advice. For tailored guidance, please contact us at: kancelaria@kk-legal.com.pl