Poland
This report analyses the implementation of the AEOI Standard in Poland with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
Poland’s legal framework implementing the AEOI Standard is in place but needs improvement in order to be fully consistent with the requirements of the AEOI Terms of Reference. While Poland’s international legal framework to exchange the information with all of Poland’s Interested Appropriate Partners (CR2) is consistent with the requirements, its domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) has deficiencies significant to the proper functioning of elements of the AEOI Standard. Most significantly, Poland’s legislative framework does not define the scope of Reporting Financial Institutions in line with the requirements nor does it have rules to prevent practices intended to circumvent the due diligence and reporting procedures.
Overall determination on the legal framework: In Place But Needs Improvement
Effectiveness of AEOI in practice
Poland’s implementation of the AEOI Standard is on track with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. This includes ensuring Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1) and exchanging the information in an effective and timely manner (CR2). Poland is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
Overall rating in relation to the effectiveness in practice: On Track
General context
Poland commenced exchanges under the AEOI Standard in 2017.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Poland:
enacted the Act of March 9, 2017, on exchange of tax information with other countries; and
made reference to the Act of November 16, 2000, on countering money laundering and terrorism financing for the purposes of the identification of Controlling Persons under the AEOI Standard.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2017 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2018.
With respect to the exchange of information under the AEOI Standard, Poland:
is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2017;
has in place European Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation as amended by Directive 2014/107/EU; and
has in place European Union agreements with five European third countries.1
Table 1 sets out the number of Financial Institutions in Poland that reported information on Financial Accounts in 2021 as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that Poland requires the reporting of Financial Accounts held by all non-residents and some accounts may be required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of Poland’s administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by Poland in the past few years (including where the necessary frameworks were in place, containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to Poland’s exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in Poland:
the National Revenue Administration (the tax administration) has the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and for exchanging the information with Poland’s exchange partners. Verification activities are undertaken by central and regional authorities and units, and the regional activities are supervised centrally;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place with the e-Deklaracje system designed to receive tailored forms based upon the Common Reporting Standard (CRS) XML Schema requirements; and
the Common Transmission System (CTS), and in the European Union (EU) the Common Communication Network (CCN), are used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of Poland’s legal frameworks implementing the AEOI Standard concluded with the determination that Poland’s domestic legal framework is In Place But Needs Improvement and its international legal framework is In Place. This has been taken into account when reviewing the effectiveness of Poland’s implementation of the AEOI Standard in practice, and where the particular identified gap in Poland’s legal frameworks directly impacts its implementation in practice, this is mentioned below.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for Poland are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
Determination: In Place But Needs Improvement
Poland’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the scope of Reporting Financial Institutions required to report information (SR 1.1) and the framework to enforce the requirements (SR 1.4). Most significantly, Poland’s legislative framework does not define Financial Assets in accordance with the requirements, nor does it contain rules to prevent practices intended to circumvent the reporting and due diligence procedures.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Poland has defined the scope of Reporting Financial Institutions in its domestic legislative framework in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. Most significantly, Poland’s legislative framework defines Financial Assets through an exhaustive list, which is not in accordance with the requirements. This is a key element to the definition of Reporting Financial Institution and is therefore material to the proper functioning of the AEOI Standard.
Poland should amend its domestic legislative framework to define Financial Asset using an inclusive approach as contained in the AEOI Standard, rather than using an exhaustive list.
Poland should amend its domestic legislative framework to require the term Investment Entity to be interpreted consistently with the language defining “financial institution” in the Financial Action Task Force Recommendation, although it is noted that the non-binding Explanatory Memorandum instructs that the interpretation of the Act be commensurate with the Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Poland has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary. While a deficiency has been identified concerning New Accounts opened during a transitory period, as alternative procedures were required and as the transitional period ended in on 30 April 2017, this is considered to be relatively minor and its impact not to be material.
Poland should ensure that New Accounts opened during the transitory period of 1 January 2016 to 30 April 2017 are subjected to due diligence procedures that are in accordance with the AEOI Standard.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Poland has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Poland has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Poland’s legislative framework does not include rules to prevent Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the reporting and due diligence procedures as required. This is a key element of the required enforcement framework and is therefore material to the proper functioning of the AEOI Standard.
Poland should amend its domestic legislative framework to include rules to prevent Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures. While it is acknowledged that the mandatory reporting requirements in place will facilitate the identification of such practices, additional rules are needed to prevent such practices.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
Poland’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Poland’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Poland and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
Poland has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
Poland put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
Poland’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Assessed jurisdiction’s comments on the assessment of its legal frameworks
As for the recommendation regarding SR 1.2, we would like to clarify that within our internal legal framework Financial Institutions are obliged to contact the account holders and request self-certification (with information on the residence as at the date of account opening) in order to document all accounts opened between 1 January 2016 and 30 April 2017 (apart from application of due diligence procedures for pre-existing accounts which they also have to apply). Based on current reporting status, financial institutions carried out most of required due diligence activities, with updated information subsequently transferred by the Polish tax administration to other countries participating in the CRS exchange.
We would like to underline that the Polish definition of Financial Asset includes all of the examples of assets listed within the paragraph 7 of the Section VIII of the Model Rules. At the same time, we want to emphasize that, although the list itself is exhaustive, the items listed in it (e.g. “security”) are not strictly defined in the Polish internal legal framework. Therefore, due to the broad and not strictly limited scope of the items included within the list, the definition allows a wide range of various assets to be covered.
As per the recommendation in respect of the definition of Investment Entity, we would like to add that we have published an official explanation (on the official website of the Ministry of Finance: https://www.gov.pl/web/finanse/informacja-w-sprawie-interpretacji-pojecia-podmiot-inwestujacy) in which we clearly state that the interpretation of term must be consistent with the Directive as well as the CRS standard (by extension, AML framework). We believe that our communication in this matter (although it is non-binding) leaves no doubt as to market practice in the interpretation of the term of Investment Entity.
Nevertheless, Polish Ministry of Finance is reconsidering the further recommendations related to the enforcement framework and to introducing adjusting amendments in the legal definitions of financial assets and investment entity.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for Poland are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
Poland’s implementation of the AEOI Standard is on track with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures and are therefore reporting complete and accurate information. This includes ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5), and collaborating with exchange partners to ensure effectiveness (SR 1.6). Poland is encouraged to continue its implementation process to ensure its ongoing effectiveness.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, Poland implemented most of the requirements in accordance with expectations. However, some issues were identified. The key findings were as follows:
Poland implemented an overarching strategy to ensure compliance with the AEOI Standard developed after conducting a risk assessment that took into account a range of relevant information sources, such as risks identified in the information reported by Reporting Financial Institutions and risks identified from the public domain. Poland’s compliance strategy facilitates compliance and incorporates a credible approach to enforcement. Poland intends to keep its compliance strategy and risk assessment under review to ensure its effectiveness on an ongoing basis. Although Poland has also undertaken some activities to ensure correct application of the requirements of the AEOI Standard where these requirements are only included in Poland’s non-binding guidance, these do not appear to be part of a formalised plan.
Poland has worked effectively to understand its population of Financial Institutions, including non-regulated entities, using relevant information sources, such as lists of regulated Financial Institutions and the Foreign Financial Institution list for FATCA purposes. However, the information sources used to identify non-regulated Financial Institutions could be expanded. Poland is taking action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules as required. Poland intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The institution responsible for implementing Poland’s compliance strategy appears to have the necessary powers and resources to discharge its functions. With respect to resourcing, Poland utilises existing resource across central and regional tax administration units to monitor and ensure compliance by Reporting Financial Institutions. Central tax administration units have access to IT systems to conduct risks assessments, such as Poland’s eDeklaracje system, and Poland has developed procedures to ensure the outcomes from risk assessments are shared with the regional units. Overall, they appear to have effectively implemented an operational plan to verify compliance with the requirements, incorporating appropriate compliance activities.
It appears that Poland effectively enforces the requirements, including through the inspection of records of Reporting Financial Institutions during onsite visits and the application of dissuasive penalties and sanctions for non-compliance. It also appears that effective action is taken to ensure self-certifications are obtained as required and to follow up on undocumented accounts.
Poland has a good understanding of the risks to effective implementation from circumvention practices and Poland has processes to identify such risks. However, Poland was unable to demonstrate how it takes effective action to address circumvention of the requirements if such circumvention is detected. This reflects its lack of a legal basis to prevent practices intended to circumvent the reporting and due diligence procedures as required.
Poland will keep its jurisdiction-specific lists of Non-Reporting Financial Institutions and Excluded Accounts under review to ensure they continue to pose a low risk of being used for tax evasion purposes.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
In terms of the Financial Account information collected and sent by Poland, while the level of undocumented accounts appeared to be in line with most other jurisdictions, it was found to include a lower proportion of Tax Identification Numbers with respect to the individuals associated with the accounts when compared to most other jurisdictions. Furthermore, while the collection and reporting of dates of birth is generally higher across jurisdictions, Poland nevertheless reported a lower rate of collection of dates of birth when compared to other jurisdictions. These are key data points for exchange partners to effectively utilise the information. Follow-up discussions confirmed that Poland is aware of these issues and is taking steps to address them.
Feedback from Poland’s exchange partners indicated that, compared to what they generally experience when seeking to match information received from their exchange partners with their taxpayer database, they achieved a relatively lower level of success when seeking to match information received from Poland. Furthermore, two exchange partners highlighted issues with respect to the information received, such as a significant number of invalid Tax Identification Numbers. Follow-up discussions confirmed that Poland is aware of these issues and is seeking to improve the situation.
Based on these findings it was concluded that, overall, Poland is meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. It was also noted that there is room for improvement with respect to monitoring the application of provisions contained only in non-binding guidance. Poland is therefore encouraged to continue its implementation process accordingly, including by addressing the recommendations made.
Poland should monitor the application of all of the provisions contained only in non-binding guidance to ensure Reporting Financial Institutions apply them effectively in practice.
Poland should expand the information sources it uses to identify non-regulated entities that are Financial Institutions for the purposes of the AEOI Standard.
Poland should put in place a clearly defined policy to ensure that, where circumvention is identified, action is taken to address it. Reference is made to the recommendation made when assessing Poland’s legal frameworks implementing the AEOI Standard.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
In order to collaborate on compliance and enforcement, Poland implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. In particular, Poland received a notification from one of its partners and successfully processed it in a timely manner, resolving the issues raised. Poland also notifies its partners of errors or suspected non-compliance it identifies when utilising the information received.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. Poland is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
Poland’s implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information (SR 2.4), correctly transmitting the information in a timely manner (SRs 2.5 – 2.8) and providing corrections, amendments or additions to the information (SR 2.9). Poland is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
Feedback from Poland’s exchange partners did not raise any specific concerns with respect to their ability to process the information received from Poland and therefore with respect to Poland’s implementation of these requirements. More generally, one of Poland’s exchange partners reported rejecting more than 25% of the files received, although did not reject more than 50% of the files received, due to the technical requirements not being met. This is broadly in line with the general experience of other jurisdictions. It was noted that Poland has already successfully addressed the issue raised.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to sorting, preparing and validating the information. Poland is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, Poland linked to the CTS and the CCN, which is used for exchanges within the EU.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Poland is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
Feedback from Poland’s exchange partners did not raise any concerns with respect to timeliness of the exchanges by Poland and therefore with respect to Poland’s implementation of this requirement.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to exchanging the information in a timely manner. Poland is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from Poland’s exchange partners did not raise any concerns with respect to Poland’s use of the agreed transmission methods and therefore with Poland’s implementation of this requirement.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Poland is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
Feedback from Poland’s exchange partners did not raise any concerns with respect to Poland’s receipt of the information and therefore with Poland’s implementation of these requirements.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to the receipt of the information. Poland is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
Poland has responded to a notification and provided corrected, amended or additional information in a timely manner and no such concerns were raised by Poland’s exchange partners and therefore with respect to Poland’s implementation of these requirements.
Based on these findings it was concluded that Poland is fully meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Poland is encouraged to continue to ensure the ongoing effectiveness of its implementation.
Note
← 1. Andorra, Liechtenstein, Monaco, San Marino and Switzerland.