Clifford Chance
Foreign bond issuance and new rules on thin capitalisation
19 March 2015
A recent amendment to the Polish Act on Corporate Income Tax has redefined thin capitalisation rules that specify the amount of intragroup loans that may be disbursed between members of a single capital group. The method of calculating this amount has been changed and is in general less favourable than the previous one. The interest on loans above a specific amount is not tax deductible.
This means that the new regulations will have a critical impact on the existing methods of
financing Polish companies through bond issues conducted outside Poland (such as eurobond or high-yield issues). Inappropriate transaction structuring may result in unnecessary tax expenses or even undermine the economic sense of foreign bond issues.
