Executive summary

On 17 February 2025, the Polish Ministry of Finance announced plans to amend the Tax Ordinance,¹ in part outlining anticipated changes to the Mandatory Disclosure Rules (MDR). These amendments might affect both Polish and foreign (European Union (EU) and non-EU) entities subject to Polish MDR provisions. The primary aim of these proposals was to improve the relationship between taxpayers and tax authorities while increasing the efficiency of tax administration. A full draft of the proposed law is not available yet and is planned to be accepted by the Council of Ministers in the second quarter of 2025.

Detailed discussion

The core of the planned changes to the MDR regime are highlighted below.

1. Adjustments to MDR reporting for professionals bound by legal professional privilege: In light of a ruling (C-694/20)² by the Court of Justice of the EU (CJEU) and an EU Directive (2023/2226), the proposals would exempt legal advisors, advocates, tax advisors and patent attorneys from MDR reporting obligations. However, these professionals may still be required to inform their clients about the necessity of reporting tax arrangements.
2. MDR decrees: The Minister of Finance would be granted the authority to issue decrees exempting certain transactions from obligations to report domestic arrangements, specifically targeting certain groups of entities.
3. Reduced compliance burden under MDR provisions: The requirement for MDR-2 (for intermediaries) notifications would be repealed, and the frequency of MDR-3 (for beneficiaries) submissions would be reduced to once a year, allowing for submissions by proxy.
4. Reduction of penalties: Fines for failing to report a tax arrangement would be reduced from 720 to 240 daily rates, decreasing the maximum fine from PLN³44.8m (approx. US$11m) to PLN14.9m (approx. US$3.7m). In addition, certain sanctions might be eliminated.
5. Efficiency improvements: The obligation for the Head of the National Tax Administration to assign a tax arrangement number (TAN) would be removed, if the submitted arrangement information already contains a TAN due to another entity's submission of an MDR report.

Anticipated changes address some areas that had presented issues for both taxpayers and tax professionals.

According to statistics published by Polish Ministry of Finance,⁴ 17,577 MDR-1 reports were submitted between 30 June 2020 and 31 December 2024, of which only 4,591 (approx. 26%) related to cross-border arrangements (4,062 were subject to exchange of information with other EU countries).

In media statements,⁵ the Deputy Ministry of Finance explained that the workload for entrepreneurs due to MDR is disproportionately large in relation to the information that the tax administration receives. He added that the administration will learn about tax optimization attempts regardless, thanks to Standard Audit File for Tax (SAF-T; Jednolity Plik Kontrolny (JPK), in Polish) and National E-Invoicing System⁶ (Krajowy System e-Faktur (KSeF), in Polish). Note that the new CIT SAF-T enters into force starting from 2025.

The official also added that the Finance Minister "is determined to reduce the reporting obligations with respect to domestic arrangements by up to 70 percent."

Implications

Highlights of the reform suggest that taxpayers might be subject to less MDR reporting. One of the possible effects could be increased scrutiny of the reports submitted in future.

It will be crucial to monitor upcoming developments involving the Tax Ordinance and to perform detailed analyses of the potential impact on taxpayers' obligations prior its entry into force.