On November 7, 2008 the Polish Parliament adopted a number of essential amendments to the Act on Tax on Civil Law Transactions (TCLT). The Act, which takes effect on January 1, 2009, is waiting to be signed by President Kaczynski.

Loans Granted to a Corporation by Its Shareholders

A loan granted to a corporation by its shareholder(s) will not be subject to TCLT. Such loans are classified under current law as an amendment to articles of association and are subject to 0.5 percent TCLT on their nominal value. A loan of this type is a frequently used form of providing additional funds to a corporation as an alternative to both a bank loan and financing with equity.

Restructuring Processes Excluded From Being Subject to TCLT

The main purpose of the amendments to the Act on TCLT is to exclude mergers and transformations of corporations from being subject to TCLT, which is aimed at harmonizing Polish law with the EU directive providing for the exemption of certain restructuring activities from TCLT. Mergers of corporations and restructuring of corporations into new corporations will not be subject to TCLT. According to the current wording of the Act on TCLT, such processes are classified as an amendment to articles of association and are subject to 0.5 percent TCLT (provided the value of the share capital is increased as a result of such processes).

Noncash Contributions Not Subject to TCLT

Amendments to the Act on TCLT provide for excluding contributions of certain assets from being subject to TCLT. The amendments apply to a majority of shares in one corporation being contributed to another corporation or a division of a corporation. Under current law, such transactions are subject to 0.5 percent TCLT, as in the case of amendments to articles of association.