Structuring a lending transaction


Who are the active providers of secured finance in your jurisdiction (eg, international banks, local banks or non-bank financial institutions)?

The most active providers of secured finance in Poland are banks – both international (mostly German) and domestic. However, in recent years insurance companies and mezzanine debt funds have played a noticeable (although not substantial) role on the market.

Is well-established market-standard facility documentation used in your jurisdiction for secured lending transactions?

In most cases, Polish law-secured lending transactions are governed by documentation largely based on recommended forms published by the Loan Market Association (LMA). In November 2016 the Polish Bank Association launched a recommended Polish language version of an LMA-based form for Polish law-governed loan facility agreements. This form does not have the status of an LMA document. When they are not represented by external legal counsel, domestic banks often use their own standard forms of documentation, especially in low-value transactions.


Are syndicated secured loan facilities typical in your jurisdiction?

Yes, syndicated loan agreements are very common, especially for large investments (eg, within project finance or larger real estate finance transactions).

How are syndicated facilities normally structured? Does the law in your jurisdiction allow a facility agent to be appointed to act on behalf of other banking syndicate members?

Typically, within syndicated facilities all lenders are parties to the loan facility agreement, with one also acting as agent and mandated lead arranger. The agent's role is (among other things) to coordinate the loan utilisation (including verifying the fulfilment of conditions precedent), payments, collateral administration, communication, and day-to-day administration of the loan facility.

Does the law in your jurisdiction allow security and guarantees to be held on trust by a security trustee for the benefit of the banking syndicate?

The concept of trust as understood in common law jurisdictions is not recognised in Poland. However, within syndicated lending transactions, in most cases the administrative agent also acts as the security agent in the name and on behalf of all the secured parties. In such cases, it holds the collateral on behalf of all the lenders, performs ministerial and administrative functions necessary to maintain the valid security interest and exercises remedies with respect to collateral in the case of an occurrence of an event of default. Moreover, Polish law makes a distinction between the legal concepts of pledge administrator and mortgage administrator. Guarantees are granted in favour of respective lenders.

In some secured lending transactions, the concept of parallel debt is introduced where the security agent has a separate claim against the borrower and this claim is secured and guaranteed.

Special purpose vehicle financing

Is it common in secured finance transactions for special purpose vehicles (SPVs) to be used to hold the assets being financed? Would security generally be given over the shares in the SPV or would lenders require direct asset security?

Yes, in Poland it is common in secured finance transactions for SPVs to be used to hold the assets being financed. When an SPV is used, the lender is granted security over the shares in the SPV as well as over its assets.


Is interest most commonly calculated by reference to a bank base rate or a market standard variable reference rate (eg, LIBOR, EURIBOR or HIBOR)? If the latter, which is the most commonly used reference rate in your jurisdiction?

Interest is most commonly calculated by reference to a market standard variable reference rate and then increased by the agreed margin. Depending on the currency in which the loan facility is granted, the most commonly used reference rates are EURIBOR and WIBOR (the Warsaw Interbank Offered Rate). The loan facility agreements usually contain provisions determining other benchmarks in case of lack of screening of a market standard variable reference rate. As benchmark interest rates may become negative, the parties usually agree that if this happens, the rate will be deemed to be zero.

Are there any regulatory restrictions on the rate of interest that can be charged on bank loans?

The rate of interest that can be charged on bank loans is limited by mandatory provisions of Polish law. Depending on whether a loan facility is being granted by a bank or a non-bank lender, the Polish Civil Code and the Act on Terms of Payments within Transactions Involving Commerce set limits for contractual and default interest. The limits for both types of interest are linked to the current reference rate published by the National Bank of Poland and they are above the standard market rates.

Use and creation of guarantees

Are guarantees used in your jurisdiction?

Yes, guarantees are used in Poland. A distinction can be made between bank guarantees, insurance guarantees and guarantees issued by entities that are neither banks nor insurers. With respect to the latter category, two types of guarantee are recognised:

  • Suretyship – by a suretyship agreement, the surety commits the creditor to perform an obligation if the debtor does not perform it. The validity of suretyship depends on the validity of the underlying obligation of the debtor. Suretyship is regulated by the Civil Code.
  • Guarantee – guarantees are not regulated by the Civil Code, but the legal construction of a guarantee is commonly recognised by Polish courts based on the freedom of contract rule.

What is the procedure for their creation?

In the case of suretyship, pursuant to the Civil Code, the surety’s declaration should be made in writing, otherwise it is invalid.

As mentioned, guarantees are not regulated by the Civil Code and therefore there are no statutory requirements relating to the form of a guarantee. Guarantee agreements are usually executed in written form. 

A bank guarantee and an insurance guarantee should be made in writing, otherwise they are invalid.

Do any laws affect or restrict the granting or enforceability of guarantees in your jurisdiction (eg, upstream guarantees)?

Some of the key laws which may affect the granting or enforceability of guarantees are:

  • Actio pauliana – Pursuant to the Civil Code, if a third party has gained a benefit as a result of a legal transaction effected by a debtor to the detriment of its creditors (ie, where the debtor became insolvent or became insolvent to a greater extent as a result of the transaction), each of the creditors may demand that the transaction be recognised as ineffective if the debtor consciously acted to the creditors' detriment and the third party knew about it or with due diligence could have known about it (and it is alleged that the third party knew that the debtor acted to the creditors' detriment if the third party remains in a permanent or close economic relationship with the debtor) or the third party obtained the benefit free of charge.
  • Insolvency and restructuring laws – a guarantee may be at risk of being set aside under Polish insolvency and restructuring laws if it was granted by a company a certain period prior to the onset of insolvency or restructuring proceedings. 
  • Financial assistance regulations – a joint stock company may directly or indirectly finance the acquisition of or subscription for the shares that it issues, in particular by making loans, providing advance payments or creating security, provided that the financing is granted on market terms and the solvency of the debtor has been checked, the acquisition or subscription is for a fair price, the financing is made from the reserve capital created by the company for that purpose and the financing is based on and within the limits set out in an earlier resolution of the general assembly of the company. In the case of a limited liability company, the shareholders may not receive, under any title, any payments from the company's assets needed to fully finance the share capital.

Subordination and priority

Describe the most common methods of structuring the priority of debts and security.

Debts may be classified in the following layers, starting from the most privileged:

  • senior secured debt;
  • senior unsecured debt;
  • mezzanine debt;
  • subordinated debt; and
  • equity.

The most common methods of structuring the priority of debt and security are the contractual subordination of debt and the creation of different ranking security in rem over the assets of the debtor.

In the event of the insolvency of the borrower, the holders of the security interests in rem will be satisfied from the secured assets before all other creditors (in accordance with their priority).

The priority of security interests is determined by chronological order; however, in general, the priority of the security interests in rem may also be amended contractually.

It is also typical for the various classes of lender to sign an intercreditor agreement and for the borrower to regulate the priority of debts, the security and the manner of enforcing the security.

Documentary taxes and stamp duty

Are any taxes, stamp duty or other fees payable on the granting of a loan, guarantee or security interest, or on its enforcement?

Tax on civil law transactions Loan agreements (and amendments to such agreements, if they result in an increase of the principal) may be subject to a 2% tax on civil law transactions (TCLT) if:

  • the rights arising out of the loan agreement are exercised in the territory of Poland (if the loan is granted by a foreign company, this condition is not fulfilled); or
  • the rights arising out of the loan agreement are exercised abroad, but the borrower has its place of residence or registered office in Poland and the loan agreement was executed in Poland.


Tax obligations arise when a loan agreement is executed. Generally, the tax base is the amount or value of the loan (principal). If the principal is to be paid in tranches and the total amount of a given tranche is unknown (eg, in the case of an agreement not specifying the total amount of the principal), the tax is due in relation to a given tranche once it is paid out. The borrower is obliged to calculate and pay the tax within 14 days of executing the loan or receiving the tranche of the loan.

As a rule, loans granted by financial institutions and entities whose business activity consists of providing financing (and are considered as value added tax (VAT) payers) are not subject to TCLT (as they are subject to VAT – they benefit from VAT exemption). Moreover, loans granted by a shareholder to the company in which it holds the shares (a limited liability company or joint stock company) are exempted from TCLT.

A guarantee or a security is not subject to TCLT.

The establishment of a mortgage is subject to TCLT. The tax rate is 0.1% of the amount of the secured debt – if it is possible to determine the amount of the debt – or PLN19 (approximately €5) to secure a debt of an undetermined amount.

Court fees There are court fees involved in the registration of registered pledges and mortgages in the relevant registers. Additional court fees are payable if any amendments to the registered pledges or mortgages are registered.

Stamp duty Stamp duty is payable if the application to register a security is filed by an attorney in fact.

Notarial fees Notarial fees are involved if any security interest is executed in the form of a notarial deed (eg, mortgage) or with signatures certified by a notary (eg, a civil pledge over shares in a limited liability company) or with the date certified by a notary (eg, a security assignment or security transfer of assets). In any case, notarial fees are capped at PLN10,000 (approximately €2,350).

Withholding tax Unless an exemption applies, interest payments made to a non-Polish entity under a loan – as well as guarantees and securities granted – are subject to withholding tax.

Payments of interest to Polish entities other than individuals are not subject to withholding tax.

The general withholding tax rate on interest paid, guarantees and securities granted to non-Polish residents is 20%. The rate may be reduced or eliminated by way of a double taxation treaty concluded between Poland and the payment recipient’s country of residence, under certain conditions (ie, the payer obtains a valid certificate of fiscal residence of the payment recipient/beneficial owner).

According to the relevant Polish provisions that are based on the EU Interest Royalty Directive, revenues arising out of interest payments are exempted from withholding tax if all of the following conditions are met:

  • The company making the payment is related to a company located in another EU or European Economic Area (EEA) member state that is the recipient of the payment (a related company being a direct shareholder company, direct subsidiary company or direct sister company that has held directly at least 25% of the capital of the other company for an uninterrupted period of two years).
  • Both the payer and the recipient company:
    • are tax resident in an EU/EEA member state;
    • are subject to corporate income tax in the European Union or European Economic Area; and
    • are in the form of a company listed in the annex to the Polish Corporate Income Tax Act.
  • The recipient must present a certificate of tax residence issued by the tax authorities in its country of residence and a signed declaration that it is subject to tax on its entire taxable income in its country of residence.
  • The recipient must present a statement that it is the beneficial owner of the interest received.

Since the obligation to pay withholding tax is subject to double taxation treaties to which Poland is a party, if the above exemption does not apply, the relevant double taxation treaty should be verified to determine any possible reduction or exemption (eg, the treaty between Poland and France provides for no withholding tax on interest). Moreover, a number of Polish double taxation treaties provide for an exemption applicable to interest payable to banks.

Corporate income tax As a rule, income generated on transactions of granting guarantees, securities or any other security by a foreign company are not subject to corporate income tax in Poland (other than the obligation to pay withholding tax).

Notwithstanding this, if a guarantee or security is granted free of charge, it may be treated as a free-of-charge benefit that leads to the generation of revenue subject to corporate income tax for the entity to which the benefit was granted.

VAT Transactions granting guarantees, securities or any other security are generally subject to VAT, but benefit from VAT exemption if they take the form of providing services.

In such case, services granting securities, guarantees and any other security for financial and insurance transactions and services of agency in the supply of such services are exempt from VAT. The management of credit guarantees by a creditor or lender also benefits from VAT exemption.

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