Pillar Two – practical steps for Polish subsidiaries

A German automotive group reviews its global effective tax rate and realises its Polish manufacturing subsidiary sits inside the Pillar Two perimeter. The parent company asks Warsaw for a qualified domestic minimum top-up tax (QDMTT) calculation, a safe-harbour assessment, and a GloBE Information Return filing plan – all within 90 days. The subsidiary's finance team has never encountered these concepts before.

Pillar Two – the global minimum tax framework adopted by the OECD – applies to multinational enterprise (MNE) groups with annual consolidated revenue of EUR 750 million or more. In Poland, the rules were transposed into Polish tax legislation effective 1 January 2025, introducing both the Income Inclusion Rule (IIR) and the QDMTT. Polish subsidiaries that fall within scope must calculate their effective tax rate (ETR) jurisdiction-by-jurisdiction and, if the ETR falls below 15 percent, pay a top-up tax to bring it to that floor.

This guide walks through the practical steps a Polish subsidiary must take: scoping, data collection, safe-harbour testing, QDMTT calculation, and filing. Three business scenarios illustrate how the obligations differ depending on entity profile. The guide also flags the most common mistakes and answers the questions we hear most often from finance directors and in-house counsel.

How does Pillar Two apply to Polish subsidiaries?

Polish tax legislation implementing Pillar Two covers constituent entities of in-scope MNE groups. A constituent entity is any entity whose financial results are consolidated – fully or line by line – into the ultimate parent entity's (UPE's) consolidated financial statements. The EUR 750 million revenue threshold is tested at group level, not at the level of the Polish entity. A subsidiary generating PLN 20 million in Poland is still in scope if its parent exceeds the threshold.

The Polish rules introduce three charging mechanisms. The IIR allows the UPE (or an intermediate parent entity) to collect a top-up tax on low-taxed subsidiaries. The undertaxed profits rule (UTPR) operates as a backstop. The QDMTT is a domestic charge collected by the Polish tax authority – the Krajowa Administracja Skarbowa (National Revenue Administration, KAS) – before any foreign top-up tax is assessed. A QDMTT paid in Poland offsets any IIR or UTPR charge at parent level, making it the primary tool for Polish subsidiaries.

The National Court Register (KRS) records the entity's legal form, which affects how Polish corporate income tax (CIT) interacts with the GloBE rules. Partnerships and transparent entities require special treatment. The Polish Financial Supervision Authority (KNF) may also be relevant for financial-sector entities subject to sector-specific tax regimes. Groups should identify all Polish constituent entities – including dormant ones – at the outset.

• Confirm the group's consolidated revenue exceeds EUR 750 million.
• List all Polish entities and their legal forms in the KRS.
• Identify which Polish entities are fully consolidated.
• Check whether any Polish entity qualifies as a joint venture or minority-owned constituent.
• Flag any Polish entity benefiting from special tax regimes such as IP Box or the Special Economic Zone (SEZ) relief.

The first Polish QDMTT return covers fiscal year 2025. Filing is due 18 months after the end of the fiscal year for the first year and 15 months thereafter. For a calendar-year group, the first return is due 30 June 2027. Missing that deadline triggers interest charges and potential KAS audit exposure – consequences that cannot be reversed once the deadline passes.

What data does a Polish subsidiary need to collect?

Data collection is the most time-consuming stage. The GloBE rules require a jurisdiction-level ETR calculation based on adjusted financial accounts, not the statutory tax return. Polish subsidiaries must reconcile their local IFRS or Polish GAAP accounts with GloBE-specific adjustments covering deferred taxes, covered taxes, and GloBE income or loss. Groups that have not previously maintained a Pillar Two data map should budget at least three months for the initial extraction.

Covered taxes include Polish CIT, local surcharges, and withholding taxes collected at source. Deferred tax assets and liabilities require recalculation using a 15 percent rate cap – a step that often produces a different deferred tax balance than the one shown in statutory accounts. Transfer pricing adjustments made after the accounts are closed must be reflected in the GloBE calculation. This is a common gap: a Polish subsidiary that books a year-end transfer pricing true-up in Q1 of the following year may misstate its ETR for the prior period.

We secured a reversal of a preliminary QDMTT assessment exceeding PLN 3 million for a manufacturing client in the Mazowieckie region (autumn 2025). The error traced back to deferred tax liabilities that had been excluded from covered taxes in the initial data pull.

Substance-based income exclusions (SBIEs) reduce the GloBE income subject to top-up tax. The SBIE formula applies a 5 percent return on payroll costs and 5 percent on net book value of tangible assets (reducing to 5 percent after the phase-in period ends in 2033). Polish subsidiaries with significant physical operations – manufacturing plants, logistics hubs – benefit most from SBIEs. Quantifying them requires reliable fixed-asset registers and payroll data segmented by entity.

For advice on how Polish transfer pricing documentation interacts with GloBE data requirements, see our tax practice overview.

Which safe harbours are available – and who qualifies?

The OECD transitional safe harbours allow qualifying entities to avoid a full GloBE computation for fiscal years 2024 through 2026. Three tests apply: the de minimis test (revenue below EUR 10 million and income below EUR 1 million), the simplified ETR test (ETR above a transitional threshold – 15 percent for 2024, 16 percent for 2025, 17 percent for 2026), and the routine profits test (GloBE income below the SBIE amount). Passing any one test gives a safe-harbour result of zero top-up tax for that jurisdiction.

The simplified ETR test is the most widely used in Poland. It relies on qualified financial statements – either consolidated financial statements prepared under IFRS or a recognised GAAP, or the country-by-country report (CbCR) filed with the Szef Krajowej Administracji Skarbowej (Head of the National Revenue Administration). The CbCR must have been filed on time and must not contain material errors. A late or corrected CbCR disqualifies the group from using the simplified ETR test in Poland.

Our team obtained a confirmed safe-harbour position protecting a technology services subsidiary in Małopolska from a projected top-up tax of over EUR 800,000 (spring 2026). The simplified ETR test passed at 17.4 percent after correct allocation of Polish CIT prepayments to the jurisdiction-level covered taxes figure.

The permanent safe harbour for QDMTT purposes is separate. A jurisdiction that enacts a QDMTT that meets the OECD's agreed administrative guidance qualifies as a QDMTT safe harbour. Poland's QDMTT legislation is designed to meet that standard. Once the QDMTT safe harbour is confirmed at OECD level, a parent entity applying the IIR can treat the Polish QDMTT as fully creditable without running a parallel GloBE computation. Groups should monitor OECD peer review outcomes, which are expected in late 2026.

How should a Polish subsidiary calculate and pay the QDMTT?

The QDMTT calculation follows the GloBE formula: top-up tax equals the top-up tax percentage multiplied by the GloBE excess profit. The top-up tax percentage is 15 percent minus the ETR. Excess profit is GloBE income minus the SBIE. If the ETR already exceeds 15 percent – which is common for Polish subsidiaries with full CIT exposure at 19 percent – the QDMTT is zero. However, entities benefiting from IP Box (taxed at 5 percent on qualifying income), SEZ exemptions, or research and development (R&D) super-deductions may see their blended ETR fall below the floor.

IP Box is a particular watch point. A Polish subsidiary routing significant income through IP Box at 5 percent, while also carrying low-taxed deferred income, may produce an ETR well below 15 percent on a GloBE basis even if its headline CIT exposure looks adequate. The interaction between IP Box, Polish tax law deferred tax rules, and GloBE covered taxes requires careful modelling. This is not a question a subsidiary can resolve by reading the statutory text alone.

Payment of QDMTT follows the Polish CIT instalment mechanism. Groups should check whether the subsidiary must pay quarterly QDMTT advances or a single annual settlement. KAS has not yet issued binding guidance on the advance payment obligation for QDMTT specifically, so groups should seek a written tax ruling (interpretacja indywidualna) from the Director of National Tax Information (Dyrektor Krajowej Informacji Skarbowej, DKIS) if uncertainty remains. A ruling request filed in time creates a degree of protection against interest charges even if the final position differs.

For cross-border treaty considerations that affect the characterisation of Polish-source income at parent level, see our analysis of the Poland-US double tax treaty.

What are the most common mistakes – and how can they be avoided?

Step-by-step compliance is only as reliable as the data and decisions feeding each step. Three business scenarios illustrate where mistakes cluster.

A Polish manufacturing company with EUR 900 million parent revenue assumes its 19 percent CIT rate means Pillar Two does not apply. It fails to account for IP Box income taxed at 5 percent on a portion of its revenue. The blended ETR drops to 13.8 percent on a GloBE basis. The QDMTT liability for the first year reaches PLN 4.5 million. The subsidiary had no reserve and no disclosure in its financial statements – an irreversible accounting error once the accounts are approved.

A Polish IT services company relies on a CbCR filed by its Luxembourg parent. The CbCR allocates Polish revenue incorrectly, understating the Polish ETR. The simplified ETR test fails. A full GloBE computation is required, but the subsidiary has no deferred tax data in the required format. The delay in producing compliant data triggers a KAS inquiry and a 30-day response deadline that cannot be extended.

A foreign investor's Polish holding company is treated as transparent for local tax purposes. The investor assumes the holding company is outside the GloBE perimeter. In fact, flow-through entities are constituent entities unless specifically excluded. The holding company's low or zero tax base creates a top-up tax exposure at the intermediate parent level. Identifying this early – before the first filing – allows restructuring options that are unavailable once the GloBE Information Return is filed. Personal liability of directors for failure to file accurate returns forfeits the group's ability to correct the position without penalty.

For guidance on how internal compliance failures are identified and managed, see our note on internal investigations methodology for Polish companies.

Frequently asked questions

Q: Does a Polish subsidiary need to file the GloBE Information Return itself?

A: In most cases, no. The GloBE Information Return is filed by the ultimate parent entity or a designated filing entity on behalf of the group. However, the Polish subsidiary must ensure that the data it provides to the group is accurate and timely, because errors in the return that trace back to Polish data expose the subsidiary to KAS scrutiny. Polish law also requires the subsidiary to notify KAS of the identity of the filing entity and the jurisdiction of filing within the statutory deadline – which for the first year is 30 June 2027.

Q: How long does a full QDMTT compliance project typically take – and what does it cost?

A: For a mid-size Polish subsidiary with straightforward operations, the initial scoping and data-mapping phase takes 6 to 8 weeks. A full ETR computation and QDMTT return preparation adds a further 4 to 6 weeks. External advisory fees in Poland typically range from PLN 80,000 to PLN 250,000 depending on complexity, the number of Polish entities, and whether a binding ruling request is needed. Groups that already maintain IFRS accounts and a complete CbCR dataset sit at the lower end of that range.

Q: Is it a misconception that the 19 percent Polish CIT rate automatically means no top-up tax?

A: Yes – this is the most common misunderstanding we encounter. The 19 percent statutory rate does not determine the GloBE ETR. The ETR is computed on GloBE income, which excludes certain items, and covered taxes, which exclude deferred tax assets that do not meet the recapture threshold. Entities using IP Box, SEZ reliefs, or carrying large deferred tax positions may have a GloBE ETR significantly below 15 percent despite a nominal 19 percent rate. Every Polish subsidiary in scope should run at least a high-level ETR test before concluding that no QDMTT liability arises.

What to prepare – checklist

• Confirm group revenue threshold and list all Polish constituent entities.
• Obtain or reconstruct IFRS or GAAP financial data for each Polish entity for the relevant fiscal year.
• Collect covered taxes data: CIT paid, CIT prepayments, withholding taxes, and deferred tax balances recalculated at 15 percent.
• Quantify SBIE-eligible payroll and tangible asset values per entity.
• Assess eligibility for transitional safe harbours and document the basis for any safe-harbour position taken.

Specific circumstances of your Polish subsidiary determine whether the QDMTT exposure is material or zero – and that distinction can exceed PLN 5 million in the first filing year. Waiting until Q1 2027 to begin data collection precludes the restructuring and safe-harbour options available today.

If your group has Polish constituent entities in scope and has not yet completed a scoping analysis, our team will conduct an initial ETR assessment, identify safe-harbour eligibility, and prepare a filing roadmap: contact info@kordeckipartners.com.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to Pillar Two compliance, QDMTT filings, and global minimum tax planning. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.