Accounting Services for Business

rss iconRSS


/ Taxes and Law in Poland

Thin capitalization

Thin capitalization – regulations are still unclear

Date26 Oct 2021

How to correctly settle the costs of debt financing? Unfortunately, there is still no clear answer to this question. The current regulations in this regard are unclear and the interpretations of administrative bodies – contradictory.

In 2018, Article 15c was introduced in the CIT Act to limit excessive debt financing. According to the current wording of pt. 1. of Article 15c of the CIT Act, interest on debt financing may be included as a tax deductible cost in an amount not exceeding 30% of the so-called EBITDA, i.e. the operating profit of the enterprise before deduction of depreciation, taxes and interest on incurred liabilities. However, pt. 14 of Article 15c of the same Act states that the regulation does not apply to the excess of costs of debt financing in the part not exceeding PLN 3,000,000 in a tax year.

The essence of the problem is in the interpretation of these two guidelines. Due to the imprecise wording of the regulation, it is left to the entrepreneur’s decision whether to take advantage of the indicated limits alternating or jointly. Unfortunately, the current case law on this issue is inconclusive.

According to the interpretation of the tax administration, the limits indicated in the Act should be considered independently. According to this line, an entrepreneur is eligible to deduct up to PLN 3,000,000 if 30% of EBITDA does not exceed this limit or an amount not exceeding 30% of EBITDA. In support of his position, the Director of the National Tax Information Agency points to the explanatory memorandum of the 2017 amendment to the CIT Act, which introduced these limitations for the first time.

However, according to the interpretation of voivodship administrative courts, the limits indicated in the Act may be applied jointly, so an entrepreneur may first deduct PLN 3,000,000 and only after exceeding this threshold apply the 30% EBITDA limit. The courts base their decisions mainly on the linguistic interpretation of the regulations in force. In practice, such position would mean increasing the limit for deducting the costs of debt financing by PLN 3 000 000, which is more advantageous from the perspective of an entrepreneur seeking funds for the development of his business.

The Supreme Administrative Court has not yet made a decision that would prove one side of the dispute right and could direct companies to apply the regulations properly. Entrepreneurs whose debt financing costs exceed PLN 3,000,000 must decide for themselves whether they will follow the interpretation of the tax administration or risk a legal dispute in court.

If you have any questions regarding this topic or if you are in need for any additional information – please do not hesitate to contact us:

Ask a question »


Elżbieta Naron

Elżbieta Naron
Head of Customer Relationships
Department / Senior Manager
getsix® Group
pl en de


This circular is non-binding information and serves for general information purposes. The information provided does not constitute legal, tax or management advice and does not replace individual advice. Despite careful processing, all information in this circular is provided without any guarantee for the accuracy, up-to-date nature or completeness of the information. The information in this circular is not suitable as the sole basis for action and cannot replace actual advice in individual cases. The liability of the authors or getsix® are excluded. We kindly ask you to contact us directly for a binding consultation if required. The content of this circular is the intellectual property of getsix® or its partner companies and is protected by copyright. Users of this information may download, print and copy the contents of the circular exclusively for their own purposes.