What is a holding company and what are its advantages and disadvantages? When should we consider setting it up? Discover the opportunities available in Poland before you opt for foreign structures. Organising a holding company on home soil is certainly a much cheaper solution. Both options come with their pros and cons, obviously. In this article, we will focus on the solutions provided for Polish entities with which you could incorporate your holding structure – the Polish Holding Company and the universal Alternative Investment Fund, available since 2022.

Benefits of the holding company structure

The Polish economy is not slowing down and the domestic business is growing increasingly faster. On the other hand, development means that generating sales and revenues alone may not be enough for further growth. Taking measures to organize your portfolio of companies better turns out to be necessary. It will be especially important in the case of diverse businesses, industries or territorial diversification of operations. And then there will be differences if you invite investors to the project. 

In order to avoid unnecessary costs and complications in such areas like managing individual entities to facilitate the flow of funds between different companies, a holding structure, which is a combination of various businesses or various locations under one umbrella – a holding company – may be helpful.

Such a holding company may provide many additional benefits. One of them may be the possibility of disposing of individual entities without generating additional tax obligations. If you were to sell your company shares privately, you would have to pay 19% tax (plus 4% solidarity tax). In addition, a holding company facilitates financing and consolidates the business, which consequently enhances its creditworthiness. The possibility of effective investment of the funds obtained from one business sector in new ventures by creating new entities controlled by a parent holding company is also important.

Available possibilities of holding company structures

Until recently, the entrepreneurs who wanted to establish a holding company for their business had to seek options abroad. Holding companies in locations such as Luxembourg, Cyprus or the Netherlands offer very attractive solutions that meet the needs described in the introduction of this article. Our Polish legal system did not provide for similar solutions, so an effective holding company had to be located abroad.

For several years, however, the Polish legislator has been gradually implementing new solutions, dedicated to holding and investment operations, into the Polish legal system as well. Currently, Polish entrepreneurs and investors have two available solutions to choose from: an Alternative Investment Fund (AIF), present in the market for several years and a relatively new one: a Polish Holding Company (PHC).

Both solutions are aimed at facilitating holding and investment operations and they underwent a number of legal and fiscal modifications at the beginning of this year as well as the last year. Below, there is a comparison of the two solutions available to Polish entrepreneurs.

Advantages of the Alternative Investment Fund (AIF)

The Alternative Investment Fund is a solution known for at least several years. Originally established as an investment vehicle, it could also be used for typical holding operations. Today, AIF is becoming increasingly popular. The regulations and practice of using AIF are becoming more professional. We also note the fact that The Polish Financial Supervision Authority (PFSA) examines the premises for the formation of new AIFs a little more closely. AIF is indeed a vehicle in which you can manage investors’ funds and additionally benefit from tax exemptions. 

We have already written about tax incentives for AIF in the article “Alternative Investment Fund of the Year 2023”. Below is a summary of what it looks like.

First, AIF may benefit from tax exemption on the sale of its shares. The exemption will be available if, prior to the sale of the company, AIF has held at least 5% of the shares for two years before the sale takes place. Last year, the shareholding threshold was lowered from the previous 10% to the current 5%. Importantly, in order to benefit from the exemption, the company being sold cannot own assets whose value directly or indirectly consists in 50%, or more, of real property located in Poland.

Second, AIF, if it operates in the form of a limited company, may benefit from a publicly available exemption from the taxation of dividends received by the parent company from its subsidiaries. For this purpose, AIF must of course fulfil all the conditions necessary for other entities as well, which include holding at least 10% of the shares of the dividend-paying company for at least two years (except that, unlike in the case of exempting the income from the sale of shares or stocks, this period may also be fulfilled after the receipt of the dividend).

Third, a company operating in the form of AIF is not subject to restrictions on account of the so-called thin capitalization! This means that the financial costs incurred by AIF may be included in the tax-deductible costs without restrictions (with the exception of the general rules, i.e., the relationship between expenditure and revenue)

Finally, it is possible for natural persons investing in AIF to deduct additional income acquisition costs . In order to take advantage of this deduction, you must meet additional conditions about which we wrote in the above-mentioned article. Importantly, the amount of deduction cannot exceed PLN 250,000 per year and can already be used at the time of investing in a AIF, or a subsidiary of this AIF, and the deduction itself is 50% of the expenditure for the investment made.

Advantages of the Polish holding company (PHC)

The Polish holding company is a newer solution, introduced into the Polish legal system at the beginning of 2022. However, with the advent of the current year it was significantly modified.

The premise which guided the legislator in the creation of this legal institution was to provide Polish, as well as foreign, entrepreneurs with an opportunity to base holding companies in Poland on favourable terms.

After the changes introduced at the beginning of January 2023, a holding company can be considered a limited liability company, a joint-stock company or a simple joint-stock company which meets certain conditions, i.e.:

  1. it remains a Polish tax resident;
  2. it holds at least 10% of the shares in a subsidiary, on the basis of an ownership title;
  3. direct or indirect PHC shareholders may not be entities from
  4. the so-called tax havens, specified in the regulation of the Minister of Finance or
  5. from countries deemed to be unwilling to cooperate for tax purposes (according to the list adopted by the Council of the European Union),
  6. or from countries with which Poland or the EU have not ratified an international agreement on the basis of which it is possible to exchange tax information.
  7. A PHC must conduct actual business operations (in accordance with the requirements of the regulations on controlled foreign companies);
  8. A PHC cannot be part of a tax capital group.
  9. A PHC is not entitled to using tax exemptions for business operations in special economic zones.

What is more, it is necessary to verify whether a company whose shares are held by a Polish holding company may actually be considered a subsidiary under the PCH regulations. The distinction between a domestic subsidiary and a foreign subsidiary was introduced.

A domestic subsidiary must meet the following requirements:

  1. it operates in the form of a limited liability company or joint-stock company (note: a simple joint-stock company was not permitted);
  2. it is a Polish tax resident;
  3. It does not hold participation units in investment funds or collective investment institutions or any other property rights related to the right to receive benefits as a founder (donor) or beneficiary of a foundation, trust, another entity, legal relationship of a fiduciary or similar nature;
  4. it holds at least 10% of the shares or stocks in its capital directly, on the basis of an ownership title;
  5. it cannot be a part of a tax capital group;

On the other hand, a foreign subsidiary ought to meet the same conditions as a Polish company, with the exception that it does not need to operate in the form of a limited liability company or joint-stock company and does not need to hold a Polish tax residence. A legal entity must be established in a country other than Poland, and all the income earned must be taxed in that country under the Corporate Income Tax (CIT) law, regardless of where the income is earned and regardless of not using tax exemption. Moreover, a foreign company is not permitted to be domiciled in the so-called tax havens, which are defined in the regulation of the Minister of Finance or in the countries which are regarded as non-cooperative in terms of taxation, according to the list adopted by the Council of the European Union. Additionally, or in countries with which neither Poland nor the EU has ratified an international agreement on the basis of which the exchange of tax information is possible.

If the company meets the conditions for recognition as PSH and holds shares or stocks in a domestic subsidiary or a foreign subsidiary, it may benefit from additional tax exemptions.

A Polish Holding Company is exempt from the dividend tax.

The first of these exemptions is the exemption from the taxation of dividends received by a PHC. If a PHC has owned a minimum of 10% of shares or stocks for at least two years, the dividends it receives will not be subject to taxation. 

Since January 2023, a PHC is entitled to a full exemption of 100% from dividends received from its Polish or foreign subsidiaries.  (Previously, the exemption was only 95%). For this purpose, however, it must fulfil a number of additional conditions, i.e.

  1. a company that pays dividends in the current year, as well as in any of the preceding three tax years, cannot meet the criteria for recognition as a controlled foreign company (but only according to specific criteria, i.e., not all the criteria for being recognized as a CFC are currently applicable);
  2. the dividend cannot be included in income acquisition costs, deducted from income, tax base or tax by a foreign subsidiary.

PHC and tax exemptions applying to the income from the sale of a subsidiary’s shares 

The second tax exemption that a PHC may use is the exemption of the profit earned from the sale of shares or stocks in its subsidiary. Such capital gain will be exempt from taxation if a PHC has owned at least 10% of the shares for at least 2 years.  

In order to take advantage of this exemption, shares in a subsidiary must be sold to unaffiliated entities and at least 5 days prior to the sale, a PHC must submit to the tax office a relevant statement of the intention to use the exemption.

Importantly, the exemption will be available in the case of disposal of shares or stocks in companies whose asset value directly or indirectly consists in 50%, or more, of real property located in Poland or rights to such real estate. 

PHC and the lack of withholding tax

The fact that for the dividends exempt under the regulations governing the PHC the possibility of not withholding tax is unrestricted will be an additional supporting factor. In other words, even if a subsidiary pays more than PLN 2,000,000 in dividends to a PHC in a given year, the subsidiary may still refrain from withholding the tax on that dividend without any additional conditions or the need to apply for a refund of the tax paid.

Summing up

Currently, the Polish tax system provides two favourable solutions for companies conducting holding operations. Apart from the AIF, which has existed for several years, PHC has also emerged in the last year.

Both companies offer similar tax incentives such as exemption from income tax on the sale of shares or stocks and exemption from the taxation of dividends received from subsidiaries (in the case of AIF, it will be a standard dividend exemption available pursuant to the implemented provisions of the EU directive).

However, the conditions for obtaining individual exemptions are different. In the case of AIF, the exemption of the profits from the sale of shares or stocks will be available subject to holding 5% of the shares in the company, while for PHC it will be 10%. In both cases, holding the shares or stocks to be sold for two years is required. However, in the case of received dividends, an AIF must meet the well-known conditions for the dividend exemption based on the provisions of the directive being implemented. A PHC, in turn, ensures a separate exemption which is subject to separate conditions. At the same time, it is important to note that the exemption which AIF may use is only available to companies from the EU or EEA, while in the case of PHC there is no such restriction.


It is worth noting that fulfilling the criteria for classification as an AIF seems to be less complicated than meeting the requirements for a company to be recognized as a PHC (as well as ensuring proper classification of subsidiary companies). Obtaining the AIF status is subject to various regulatory criteria, and retaining this status necessitates additional reporting and organizational elements, as the AIF operates under the supervision of the Polish Financial Supervision Authority (PFSA). While the PHC is not subject to additional supervisory activities, it must fulfil more purely tax-related conditions to be eligible for using exemptions compared to the AIF.

Even though both solutions may seem similar at first glance, they have been specifically tailored to meet the needs of different types of entrepreneurs. Nevertheless, the very possibility of choosing between two Polish solutions when designing a holding structure is already a significant step in the right direction for the Polish tax system and creates savings for entrepreneurs, due to the fact that servicing Polish entities is significantly cheaper than in the case of Luxembourg or even Cypriot entities.