MDR support services – Mandatory Disclosure Rules

Poland has chosen to extend the scope of reportable transactions in Poland to include local transactions, which implies that even local companies and groups that do not carry out any cross-border transactions may be affected by the MDR reporting duties. 

Although the entities to be affected by the MDR reporting duty are primarily promoters, there are various situations in which companies other than advisers will be required to ensure MDR compliance, for example the following ones:

• advisers may often rely on the legal professional privilege, which may imply – e.g. where a non-standardized arrangement is involved – the obligation to inform the beneficiary that the adviser will not report the arrangement to the authorities and that this obligation lies with the beneficiary;
• in some cases the point when the beneficiary’s deadlines start to run may be earlier than the promoter’s and if no confirmation arrives before the deadline that the arrangement has been reported, in practical terms this may imply that the beneficiary has to fulfil the requirement on their own;  
• although it is often advisers to fulfil the role of the promoter, the promoter may also be a group member that designs, offers, makes available, implements and/or manages the implementation of an arrangement in other group members, as well as the person who has content-related and functional responsibility for the substance of a given arrangement (e.g. an in-house adviser, tax director, Board member, CFO etc.);
• it may happen that although advisers are aware of a given transaction, they will not play the role of the promoter for the purpose of this particular arrangement, so may not be required to report, or even inform the client about, the tax arrangement;
• even if an arrangement is reported by the adviser, other MDR duties affecting the company (companies) may become applicable. 

It should always be double-checked whether this type of confirmation implies that the company is exempt from the reporting obligation (it is particularly where an arrangement has been reported in another jurisdiction that the right to be exempt may be restricted). Notwithstanding, even if a given arrangement has been reported by the adviser (or the adviser has helped the company to report it), other MDR duties may apply, including under the MDR law that requires periodic reporting (the MDR-3 form for beneficiaries and the MDR-4 form for promoters/service providers) or the implementation of an internal MDR procedure by selected promoters. 

Although it is often the advisers to play the role of the promoters, the promoter may also be a group member that designs, offers, makes available, implements and/or manages the implementation of an arrangement in other group members. This entity is required to implement and maintain an internal procedure to prevent incompliance with MDR obligations as long as their revenues or expenses for the prior financial year exceed PLN 8m (approx. EUR 1.8m). In addition, please note that in practical terms the implementation of the MDR procedure does not come down to passing a relevant internal resolution but requires that the procedure be implemented across the organisation in such a way that the particular rules (under the Tax Code, they should specifically deal with document retention, training for employees, internal controls and/or audits, breach reporting etc. in addition to the mere MDR reporting rules) can actually be put into operation. 

MDR law does not provide for exemptions from MDR reporting obligations for arrangements that incorporate preferential tax treatments offered by the existing law. In addition, since the implementation of such arrangements may often be primarily driven by a tax advantage, they may be reportable if a general hallmark is present (e.g. if standardised documents are used, the tax treatment changes and/or the adviser’s fee is a success fee). For example, reportable may potentially be a lease, a contribution to a company which is allocated to supplementary capital (agio), use of safe harbours for loans, 50% tax deductible costs claimed for copyright work,  implementation of a Polish investment zone, triangular transactions arrangements, change of VAT reporting periods. 

Although the Ministry’s web gateway does enable filling in an MDR form to be transmitted to the KAS Director, it should not be overlooked that it is merely one step in the complicated MDR reporting process. In addition to completing the form, one should identify the entities’ roles, the hallmarks present, the main benefit criterion, the value of the arrangement, the taxes and the laws that apply to the arrangement; classify the arrangement and find out the applicable reporting deadlines; for any instance of MDR reporting past the deadline, draw up and file a voluntary disclosure statement, seek an e-PUAP address and possibly an electronic signature; and for foreign companies and/or attorneys – provide documents certifying the right to sign the documents. If other group members are to rely on the fact that a tax arrangement report has already been filed, they should be provided with a TAN  confirmation document and/or the scope of the data that has been reported. One should also remember about other MDR duties that cannot be fulfilled using the Ministry’s web gateway (e.g. the requirement to implement an internal MDR procedure, which affects selected promoters).