Estonian CIT rulings in Poland – Supreme Administrative Court (NSA) on dividends, hidden profits and bond contributions

Recent Estonian CIT rulings in Poland clarify the taxation of dividends, related-party bond interest and in-kind contributions. PIT is calculated on the full distributed profit, bond interest paid to a related party may constitute hidden profits, while privately held bonds contributed by shareholders do not necessarily prevent a company from electing Estonian CIT.

How is PIT calculated on Estonian CIT dividends?

According to the NSA judgment of 29 September 2026, II FSK 1274/23, the 19% PIT on dividends must be calculated on the full amount of distributed profit attributable to the shareholder.

The company’s Estonian CIT liability is not deducted from the PIT tax base beforehand. The same approach follows from the NSA judgments of 3 June 2026 (II FSK 992/23) and 18 June 2026 (II FSK 993/23).

The combined tax burden is reduced through a statutory PIT credit:

• with a 10% Estonian CIT rate, 90% of the relevant company tax may be credited,
• with a 20% rate, the credit equals 70%.

For PLN 100,000 of distributed profit, total CIT and PIT amount to PLN 20,000 at the 10% rate and PLN 25,000 at the 20% rate, assuming the credit can be applied in full.

Can bond interest be treated as hidden profits?

In its judgment of 1 October 2026, II FSK 1291/23, the NSA held that interest on bonds paid to a related party may constitute hidden profits under Estonian CIT.

The company argued that Article 28m of the Polish Corporate Income Tax Act refers specifically to interest on loans and credit facilities but does not expressly mention bonds.

The Court rejected this distinction because the bonds performed an economic financing function comparable to a related-party loan.

For companies conducting business in Poland, this means that issuing bonds instead of using a loan does not automatically remove the risk of hidden-profit taxation.

Can a bond contribution prevent Estonian CIT?

Not necessarily. In judgment II FSK 1300/23 of 1 October 2026, the NSA confirmed that contributing bonds held as shareholders’ private assets does not automatically trigger temporary exclusion from Estonian CIT.

Article 28k of the Polish Corporate Income Tax Act covers specific restructuring transactions and contributions involving an enterprise, an organised part of an enterprise or business assets.

Exceeding the EUR 10,000 threshold alone is not sufficient to exclude the company from the regime.

The origin and nature of the contributed assets must also be examined. If the bonds belong to the shareholder’s private assets rather than a business, the exclusion conditions may not apply.

What should companies review?

The judgments concern three different stages of Estonian CIT:

• entering the regime and making in-kind contributions,
• financing operations through related parties,
• distributing profits to shareholders.

Companies investing or operating in Poland should therefore review the tax consequences of material transactions before they are completed.

The NSA judgments do not introduce new rules. They show how existing legislation is interpreted in particular factual circumstances, meaning that each company’s situation still requires an individual assessment.

Read the full article here: Estonian CIT rulings in Poland – Supreme Administrative Court (NSA) on dividends, hidden profits and bond contributions