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Incentives for Polish stock market entrants (relief for IPO costs)

The draft tax changes under the Polish Deal include many solutions aimed at realizing non-fiscal functions of taxes, in the form of new tax relief. One proposal is a new regulation in the Corporate Income Tax Act aimed at facilitating the entry of Polish companies onto the stock exchange. The relief will come into force on 1 January 2022.
Rafał Zuchowicz
Senior TAX Specialist

The new relief would make it easier for companies to raise financing via the stock exchange and encourage companies to list their shares. Considering the revival of the IPO market on the Warsaw Stock Exchange observed from the second half of 2020, it seems that a number of companies may be interested in this relief.

What will be the amount of relief?

The tax base, after deducting the amounts of R&D relief, prototype relief, sales growth relief, and consolidation relief (the last three are also new incentives under the Polish Deal, a description of which we will present shortly), may be reduced by an amount equal to:

1) 150% of the expenses for preparation of the prospectus, notary fees, court fees, stamp duty, and stock exchange fees, and preparation and publication of announcements required by law

2) 50% of expenses, excluding VAT, on legal services, including tax advisory services and financial advisory services, but not more than PLN 50,000

provided that the above expenses were incurred by the taxpayer directly for making an initial public offering of shares with the intention to apply for admission to trading on a regulated market or in an alternative trading system (e.g. NewConnect).

Deduction rules and deadlines

The deduction is to be taken in the return for the tax year in which the taxpayer first introduced its shares into trading on a regulated share market or in an alternative trading system.

Expenses incurred directly for making an initial public offering of shares are defined as expenses directly and exclusively related to the offering and incurred during the tax year in which the initial public offering of shares occurs or the preceding year, not later than the date of the IPO.

As in the case of other forms of tax relief, these costs will be deductible if they have not been reimbursed to the taxpayer in any form and have not been deducted from the income tax base.

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