A German-owned manufacturing group with three Polish subsidiaries assumed that Pillar Two was a concern for the parent company only. The Polish entities generated taxable income, paid corporate income tax at the standard rate, and filed their returns on time. Nobody had reviewed whether the group's effective tax rate in Poland fell below the 15 percent global minimum. That oversight nearly triggered a top-up tax liability running into seven figures.

Pillar Two imposes a global minimum effective tax rate of 15 percent on multinational enterprise groups with annual consolidated revenue exceeding EUR 750 million. Under Polish tax law, the rules were transposed through amendments to the Corporate Income Tax Act, placing compliance obligations directly on Polish constituent entities. A Polish subsidiary that fails to assess its own qualified domestic minimum top-up tax (QDMTT) exposure within the statutory deadlines forfeits the right to apply domestic safe harbours and risks a top-up tax charge calculated at group level by the ultimate parent jurisdiction.

This case study traces how the group identified its exposure, restructured its internal data flows, and implemented a compliance framework within a single fiscal quarter. The lessons apply to any Polish subsidiary of a large multinational – regardless of industry.

What was the background to the group's Pillar Two exposure?

The group operated three Polish entities: a production plant in Silesia, a shared-service centre in Małopolska, and a distribution company registered in Warsaw. Each entity filed separate corporate income tax returns with the relevant tax office under the National Revenue Administration (Krajowa Administracja Skarbowa, KAS). None had ever consolidated their effective tax rate figures for Pillar Two purposes. The group's ultimate parent, a German holding company, assumed that Polish CIT at 19 percent provided automatic protection. That assumption was wrong.

Pillar Two does not measure the statutory rate. It measures the effective tax rate (ETR), calculated as adjusted covered taxes divided by net qualifying income. The Polish entities carried significant deferred tax assets, applied IP Box relief at 5 percent on qualifying intellectual property income, and had benefited from research and development (R&D) super-deductions. Each of these items reduced the ETR below 15 percent in at least two of the three preceding fiscal years. The exposure was real, not theoretical.

The group had fewer than 90 days before the end of the first fiscal year in which the Polish QDMTT rules applied. Missing that window would have meant the German parent's income inclusion rule (IIR) charge would apply instead – calculated abroad, without access to Polish domestic safe harbour relief.

  • Three Polish constituent entities, each with separate ETR profiles
  • IP Box income taxed at 5 percent in one entity
  • Deferred tax assets distorting covered-tax calculations
  • No consolidated GloBE information return drafted
  • Deadline pressure: QDMTT election window closing within the fiscal year

How did the team build the compliance strategy?

The starting point was a GloBE ETR diagnostic. Within two weeks, the tax team mapped each entity's adjusted covered taxes and net qualifying income using the group's existing financial statements. The diagnostic confirmed that the Silesian production plant had an ETR of approximately 12.4 percent in the most recent fiscal year – well below the 15 percent floor. The shared-service centre in Małopolska sat at 14.8 percent. The Warsaw distributor cleared the threshold comfortably at 18.1 percent.

The strategy had three pillars (the term is apt here). First, the team assessed whether the transitional safe harbour under the OECD's agreed administrative guidance applied. The simplified ETR test uses financial accounting data rather than full GloBE calculations. For two of the three entities, the test confirmed safe harbour eligibility for the transitional period – reducing the compliance burden significantly. Second, the team prepared the QDMTT calculation for the Silesian plant, where safe harbour did not apply. Third, the team designed an internal reporting template so that each entity's finance function could produce the required GloBE data quarterly going forward.

We secured agreement from the group's German parent to centralise the GloBE information return filing obligation at the Polish level, using the notification mechanism available under Polish tax legislation. This avoided duplicate filings and gave the Polish entities direct control over their compliance calendar. The entire framework was operational within one fiscal quarter – autumn 2024.

What practical steps does the process involve?

The process breaks into four discrete phases. Each has a defined output and a hard deadline. Polish constituent entities should treat each phase as a standalone project with its own owner inside the finance or legal function.

Phase 1 – ETR diagnostic (weeks 1–3). Map covered taxes and qualifying income for each entity. Identify IP Box income, R&D deductions, and deferred tax positions. Calculate the preliminary ETR. If the ETR exceeds 15 percent in all entities and the simplified ETR safe harbour test is met, document the basis and retain it for KAS audit purposes. The Polish Financial Supervision Authority (Komisja Nadzoru Finansowego, KNF) does not supervise Pillar Two directly, but transfer pricing documentation standards set by KAS apply to the GloBE information return by analogy.

Phase 2 – Safe harbour assessment (weeks 3–5). Apply the three transitional safe harbour tests: simplified ETR, routine profits, and de minimis. Document the outcome. For entities that fail all three, proceed to a full GloBE calculation. For the transitional period ending 31 December 2026, safe harbour eligibility avoids a top-up tax charge even where the ETR falls below 15 percent.

Phase 3 – QDMTT calculation and payment (weeks 5–10). For entities outside safe harbour, calculate the QDMTT liability. Polish law requires payment within the standard CIT settlement deadline – generally within three months of the fiscal year end. A group with a December year-end must pay by 31 March. Late payment triggers interest at the standard KAS rate, currently set at 14.5 percent per annum.

Phase 4 – GloBE information return and ongoing monitoring. File the GloBE information return within 15 months of the fiscal year end (18 months for the first transitional year). Establish a quarterly data-collection routine. Connect the Pillar Two data flow to the group's existing transfer pricing documentation process – the overlap is substantial, and consolidating both workstreams reduces cost. For groups already implementing KSeF in Poland, the structured invoice data can feed directly into the GloBE income mapping exercise.

A bridge to the cross-border dimension: groups with entities in Slovakia face a parallel but distinct QDMTT regime. The interaction between Polish and Slovak calculations requires careful sequencing. For context on the Slovak side, see our analysis of what KSeF means for your business in Slovakia.

What are the transferable lessons for Polish subsidiaries?

The most important lesson is jurisdictional: do not assume the parent's perspective. The Polish QDMTT is a domestic charge levied by Polish authorities. It is not the parent's income inclusion rule applied downward. A Polish entity that proactively calculates and pays the QDMTT shields the group from the IIR charge at parent level – which is typically more expensive and harder to contest before a foreign court.

The second lesson concerns IP Box and R&D incentives. Both are legitimate and valuable. However, they mechanically compress the ETR. Any Polish subsidiary using IP Box relief at 5 percent on qualifying income should model its Pillar Two position before the fiscal year closes, not after. Retroactive restructuring of the IP Box position is not available once the year ends. We assisted a technology client in Mazowieckie (spring 2025) in reconfiguring its IP Box calculation methodology to preserve the incentive while keeping the consolidated ETR above 15 percent – a result that required acting before the year-end cut-off.

The third lesson is about data architecture. Pillar Two requires granular financial data that most Polish entities do not produce as a matter of course. The GloBE income calculation diverges from both Polish GAAP and IFRS in specific respects. Groups that invest in a Pillar Two data model in year one recover that investment many times over in subsequent years. The alternative – reconstructing data retrospectively under KAS audit – is far more costly. For groups with complex property structures, the interaction between Pillar Two asset valuations and development agreement accounting is non-trivial; our guidance on development agreements in Poland addresses the structural risks in that area.

Personal liability is a fourth consideration that boards often overlook. Under Polish corporate legislation, management board members of a Polish subsidiary bear responsibility for the accuracy of tax filings. A QDMTT underpayment that results from a board's failure to establish a Pillar Two compliance process is not a technical error – it is a governance failure. That distinction matters when KAS opens an audit.

To receive an expert assessment of your group's Pillar Two position in Poland, contact info@kordeckipartners.com.

Frequently asked questions

Q: Does Pillar Two apply to a Polish subsidiary even if the ultimate parent is outside the European Union?

A: Yes. The Polish QDMTT rules apply to any constituent entity of a multinational enterprise group with consolidated revenue exceeding EUR 750 million, regardless of where the ultimate parent is located. A Polish entity whose parent is in the United States, Switzerland, or any other non-EU jurisdiction is fully within scope. The domestic top-up tax is calculated and paid in Poland, independent of whether the parent jurisdiction has enacted its own Pillar Two rules.

Q: How long does it take to complete a Pillar Two ETR diagnostic for a Polish subsidiary?

A: For a single Polish entity with clean financial records and standard CIT filings, a preliminary diagnostic typically takes two to three weeks. Where the entity uses IP Box relief, R&D super-deductions, or has significant deferred tax positions, the process extends to four to six weeks. The timeline lengthens further if the entity's accounting records require reconciliation to GloBE standards. Engaging a tax advisor in Warsaw with direct experience of GloBE calculations reduces the timeline materially.

Q: Is it a common misconception that a 19 percent CIT rate automatically satisfies the Pillar Two threshold?

A: It is one of the most frequent misconceptions we encounter. The 19 percent statutory rate is irrelevant to the Pillar Two calculation. What matters is the effective tax rate – adjusted covered taxes divided by net qualifying income under GloBE rules. Tax incentives, deferred tax assets, exempt income, and timing differences all affect the ETR. A Polish subsidiary paying CIT at 19 percent on its taxable income can still have a GloBE ETR well below 15 percent if qualifying income exceeds the covered-tax base under Polish tax law adjustments.

About KORDECKI & Partners

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 tax compliance, Pillar Two implementation, and cross-border structuring. 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.