Pillar Two – practical steps for Polish

A German automotive group discovers that its Polish manufacturing subsidiary – profitable, well-managed, and growing – now falls within scope of the global minimum tax framework. The finance director asks a reasonable question: what exactly needs to happen, and by when? The answer is less simple than the OECD model rules suggest.

Pillar Two imposes a global minimum effective tax rate of 15% on multinational enterprise groups with annual consolidated revenues of EUR 750 million or more. Polish subsidiaries of such groups must assess their effective tax rate, prepare qualifying financial data, and cooperate with the ultimate parent entity on GloBE (Global Anti-Base Erosion) information returns. Under Polish tax legislation implementing the EU Minimum Tax Directive, the first fiscal year subject to these rules is 2024, with reporting obligations falling due in 2025 and 2026 depending on the group's filing structure.

This guide walks through the practical steps Polish subsidiaries must take: from scoping and data gathering, through effective tax rate calculation, to filing coordination and common traps. Three business scenarios – manufacturing, IT services, and a foreign investor structure – illustrate how the rules apply differently depending on the subsidiary's profile.

Is your Polish subsidiary in scope, and what triggers the obligation?

Scope is the first question. Not every Polish entity within a large group faces direct compliance work. The threshold is EUR 750 million in consolidated group revenue in at least two of the four preceding fiscal years. The National Court Register (KRS) filing alone will not tell you this – it requires a review of the ultimate parent entity's consolidated accounts.

Once in scope, the Polish subsidiary has three potential roles. It may be the constituent entity subject to a Qualified Domestic Minimum Top-up Tax (QDMTT) collected in Poland. It may be subject to an Income Inclusion Rule (IIR) applied at parent level. Or it may face an Undertaxed Profits Rule (UTPR) charge if neither of the above applies. Most Polish subsidiaries of EU-headquartered groups will encounter the QDMTT first – Poland enacted its own domestic top-up tax to capture that revenue locally rather than allowing it to flow to the parent jurisdiction.

Three practical indicators suggest your Polish entity is directly in scope. First, the group's consolidated revenue exceeds EUR 750 million. Second, the Polish subsidiary's effective tax rate – calculated under GloBE rules, not the standard corporate income tax (CIT) rate – falls below 15%. Third, the ultimate parent entity has not already confirmed that a full top-up charge will be collected elsewhere. Missing any of these three does not automatically remove the Polish entity from compliance work; it merely changes which filing obligations apply.

Confirm group revenue threshold against consolidated accounts for the past four years
Identify the Polish entity's role: QDMTT, IIR, or UTPR constituent entity
Obtain the group's GloBE master data set or confirm it is being prepared centrally
Check whether a transitional safe harbour applies (discussed below)

For a Warsaw-based IT services subsidiary with relatively low fixed assets and high payroll, the substance-based income exclusion may reduce the top-up tax exposure significantly. For a capital-intensive Silesian manufacturer, the asset carve-out matters more than the payroll carve-out. The scoping analysis is not generic – it depends on the entity's actual balance sheet.

How is the effective tax rate calculated under GloBE rules?

The GloBE effective tax rate (ETR) is not the headline 19% Polish CIT rate. It is a jurisdiction-level calculation: adjusted covered taxes divided by GloBE net income for all constituent entities in Poland. The result can diverge materially from the statutory rate because of timing differences, deferred tax adjustments, and specific add-backs required under the model rules.

Adjusted covered taxes include current and deferred taxes, subject to a set of additions and subtractions. Deferred tax liabilities relating to accelerated depreciation – common in manufacturing – are included but subject to a five-year recapture rule. Polish tax credits, including the IP Box regime (a reduced 5% CIT rate on qualifying intellectual property income), reduce covered taxes and therefore lower the ETR. A subsidiary relying heavily on IP Box should model the ETR impact carefully: the benefit that reduces Polish CIT may simultaneously push the ETR below 15%, triggering a top-up obligation.

We advised a technology client in Małopolska (spring 2025) where the interaction between IP Box and Pillar Two created an unexpected top-up liability of approximately PLN 1.8 million for the 2024 fiscal year. The group had not modelled the GloBE ETR separately from the statutory CIT position. Early identification allowed restructuring of the IP licensing arrangement before the fiscal year closed.

The substance-based income exclusion (SBIE) reduces GloBE income by 5% of eligible payroll costs and 5% of eligible tangible asset carrying values (transitional rates apply for the first years). For Polish subsidiaries with significant headcount or fixed assets, the SBIE can reduce or eliminate the top-up tax. Calculating it requires payroll data broken down by eligible employees and fixed asset data from the financial statements – both need to be extracted in a format compatible with GloBE templates.

What are the filing steps and key deadlines?

The GloBE information return (GIR) is the central filing document. For most groups, the ultimate parent entity files the GIR on behalf of all constituent entities. However, Polish subsidiaries may be required to file locally if the ultimate parent is in a jurisdiction that has not implemented a qualifying exchange-of-information agreement with Poland. The Polish tax authority – the Krajowa Administracja Skarbowa (National Revenue Administration, KAS) – is the competent authority for Polish constituent entities.

The deadline for the GIR is 15 months after the end of the fiscal year (18 months for the first year of application). For a calendar-year group, the first GIR for fiscal year 2024 is due by 30 June 2026. The QDMTT return in Poland follows the standard CIT filing calendar, with an advance payment mechanism that mirrors the existing CIT instalment structure. Missing the GIR deadline exposes the group to penalties under Polish tax procedure law – currently up to PLN 10 million per filing failure.

A step-by-step filing sequence for a Polish subsidiary looks like this:

Month 1–3 after year-end: gather GloBE financial data from local accounting system
Month 3–6: calculate GloBE ETR and SBIE; apply transitional safe harbour test
Month 6–9: coordinate with group tax team on GIR preparation and data validation
Month 9–15: submit GIR (or confirm parent filing) and settle any QDMTT liability
Ongoing: update deferred tax models and transfer pricing documentation for GloBE consistency

Transfer pricing is directly affected. The arm's length pricing of intra-group transactions feeds into GloBE income. A transfer pricing adjustment – even one accepted by KAS – can alter the ETR for the Polish jurisdiction. Polish subsidiaries should instruct their transfer pricing advisors to flag any adjustments that could affect the GloBE calculation.

For groups using the transitional Country-by-Country Reporting (CbCR) safe harbour, the filing burden is reduced substantially. If the Polish jurisdiction passes the simplified ETR test using CbCR data, no full GloBE ETR calculation is required for that year. Many Polish subsidiaries of large EU groups qualify for this safe harbour in 2024 and 2025 – but the test must be performed and documented, not assumed.

Three business scenarios: manufacturing, IT, and foreign investor

Practical application differs by sector. The following three scenarios illustrate the most common patterns seen in Polish subsidiaries, each with a different compliance profile and cost implication.

Manufacturing subsidiary (Silesia): A German group's Polish plant has high fixed assets and significant payroll. The SBIE carve-out is large, potentially reducing GloBE income to a level where no top-up tax is due. The main compliance task is extracting eligible asset and payroll data in GloBE format – typically 40 to 60 hours of finance team time plus external review. The transitional CbCR safe harbour is likely to apply, reducing the first-year burden further. The plant's accelerated depreciation for CIT purposes creates deferred tax timing differences that must be modelled carefully.

IT services subsidiary (Warsaw): A US technology group's Polish delivery centre has low fixed assets but high payroll. IP Box usage reduces the effective CIT rate to 5% on qualifying income. The GloBE ETR calculation must exclude IP Box-reduced taxes from covered taxes, which may push the ETR toward or below 15%. The QDMTT liability could be material – potentially EUR 200,000 to EUR 500,000 annually depending on qualifying IP income volumes. Early modelling before fiscal year-end allows the group to consider whether the IP Box election remains economically optimal under the new framework. For context on how digital invoicing obligations intersect with data readiness for Pillar Two, see our analysis of KSeF timelines.

Foreign investor holding structure: A private equity fund holds a Polish operating company through a Luxembourg intermediate holding. The intermediate holding may itself be a constituent entity. The Polish operating company's ETR depends on whether management fees and financing costs paid to the Luxembourg entity are treated as covered taxes at group level. AML compliance obligations for the Polish entity also interact with beneficial ownership disclosure requirements relevant to Pillar Two substance analysis – see our guide on AML obligations for Polish companies. The group should confirm whether the Luxembourg entity's tax position affects the Polish jurisdiction's GloBE ETR.

We secured a reduction in a projected QDMTT liability exceeding EUR 300,000 for a manufacturing client in the Mazowieckie region (autumn 2025) by correctly applying the SBIE payroll carve-out to eligible support-function employees who had been excluded in the initial group calculation.

Frequently asked questions

Q: Does Pillar Two apply to Polish subsidiaries with no direct filing obligation?

A: Yes – even if the ultimate parent files the GloBE information return centrally, Polish constituent entities must maintain GloBE-compliant financial data and cooperate with the group tax team. Polish tax law requires local constituent entities to retain supporting documentation for at least five years. Failure to maintain adequate records can result in KAS imposing penalties during a tax audit, even where no separate Polish filing was required.

Q: How long does the initial GloBE ETR calculation take, and what does it cost?

A: For a Polish subsidiary with a single legal entity and standard CIT history, the initial calculation typically takes four to eight weeks and costs between PLN 30,000 and PLN 80,000 in external advisory fees, depending on complexity. Subsidiaries using IP Box, R&D relief, or special economic zone (SSE) exemptions require additional modelling time. Groups that have already prepared Country-by-Country Reports can reduce this timeline by two to three weeks by using CbCR data as the starting point.

Q: Can a Polish family foundation that owns a constituent entity affect the Pillar Two analysis?

A: A Polish family foundation (fundacja rodzinna) is generally treated as a flow-through or excluded entity under GloBE rules if it meets the definition of an excluded entity – broadly, an entity that is not engaged in active business and whose income is subject to tax at beneficiary level. However, if the family foundation controls a constituent entity that is within scope, the foundation itself must be assessed. A tax advisor Warsaw-based practitioners familiar with both family foundation regulations and Pillar Two mechanics should review the structure before assuming exclusion applies.

What should Polish subsidiaries prepare now?

The window for proactive action is narrowing. The first QDMTT returns for fiscal year 2024 are due in 2025 for groups with non-calendar fiscal years, and no later than mid-2026 for calendar-year groups. Acting after the fiscal year has closed forfeits the opportunity to restructure arrangements, apply elections, or correct data errors before they become filed positions. That opportunity, once lost, cannot be recovered for the closed year.

A practical readiness checklist for Polish subsidiaries:

Confirm group revenue threshold and obtain written confirmation of scope from the group tax team
Extract GloBE-compatible financial data from the local accounting system (trial balance mapped to GloBE categories)
Identify all tax attributes affecting covered taxes: CIT, IP Box elections, R&D relief, SSE exemptions, deferred tax positions
Calculate the SBIE payroll and asset carve-out using eligible employee and fixed asset data
Run the transitional CbCR safe harbour test and document the result

Specific steps depend on the subsidiary's profile. A Polish tax law specialist can identify which transitional reliefs apply and whether the group's central GIR preparation adequately captures the Polish entity's position. Errors in the group model – particularly around deferred tax and SBIE eligibility – are common and can be corrected before filing if identified early.

Your company's specific Pillar Two exposure depends on tax attributes, group structure, and fiscal year timing that are unique to your situation. Acting on a generic template without reviewing the actual numbers risks either overpaying a QDMTT liability that could have been reduced or underreporting and facing KAS penalties.

If your Polish subsidiary is part of a group above the EUR 750 million threshold and you have not yet modelled the GloBE effective tax rate, we will conduct a scoping review, identify applicable safe harbours, and coordinate with your group tax team on GIR preparation: 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 tax advisory, including Pillar Two compliance, KSeF onboarding, JPK_CIT, transfer pricing, and KAS audit defence. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.