Equality for investment funds – CJEU judgment
Monika Lewińska & Piotr Prokocki
by Monika Lewińska & Piotr Prokocki
In February 2025, the Court of Justice of the European Union (CJEU) issued a judgment which opened up the possibility of benefiting from corporate income tax (CIT) exemptions for all foreign funds invested in Poland.
Controversial provisions
Investment funds are divided into two categories: externally managed funds, and internally managed funds. The former are managed by an external management company, while the latter are managed by their own board of directors.
Funds based in Poland operate exclusively under the external management model. At the same time, the Polish Corporate Income Tax Act provides a tax exemption for certain collective investment institutions based in EU/European Economic Area (EEA) countries. In order for foreign funds to benefit from the CIT exemption in Poland, they must meet several conditions, one of the most controversial being the requirement for supervision by the relevant financial authorities in the fund’s country of residence. As a result, foreign funds managed internally, i.e. those without an external manager, face difficulties in obtaining the CIT exemption in Poland.
CJEU clear ruling
The CJEU clearly stated that investment funds based in the EU/EEA, which are managed internally, will be eligible to apply for the CIT exemption on the same terms as externally managed funds.
The CJEU ruled that the method of fund management, whether internal or external, does not affect the ability to benefit from the tax exemption. The court concluded that provisions of EU member states that create such a distinction are contrary to Article 63(1) of the Treaty on the Functioning of the European Union (TFEU), which guarantees the free movement of capital.
Opportunities for foreign investment funds
Internally managed funds, which previously could not benefit from tax preferences (tax exemption), can now apply for the CIT exemption on equal terms as externally managed funds.
Funds that were previously unable to obtain the CIT exemption due to their internal management structure may now request the reopening of concluded proceedings and seek a refund of overpaid taxes along with interest.
Based on the judgment of the CJEU, funds that are still undergoing tax proceedings should now demand the right to the tax exemption, regardless of their management structure.
Funds that previously did not request a tax refund can now take advantage of the CJEU ruling and apply for a refund of overpaid tax, including interest.
GGI member firmPenterisWarsaw, PolandT: +48 22 257 83 00Law Firm Services, Tax
Penteris is a dynamic European firm dedicated to supporting investors in staying ahead of market trends with tailored legal and tax advice. By focusing on “getting things done” and fostering “long-term relationships,” they deliver practical solutions that meet the needs of their clients.
Piotr Prokocki specialises in comprehensive tax services for M&A and develops effective structures for financing transactions, capital withdrawal, and profit distribution. Contact Piotr.
Monika Lewińska deals with day-to-day services and support for business entities in the field of indirect taxes with a particular emphasis on value-added tax. Contact Monica.
