Peer Review of the Automatic Exchange of Financial Account Information 2020

Poland

Overall findings

Overall determination on the legal framework: In Place But Needs Improvement

Poland’s legal framework implementing the AEOI Standard is in place but needs improvement in order to be fully consistent with the requirements of the AEOI Terms of Reference. While Poland’s international legal framework to exchange the information with all of Poland’s Interested Appropriate Partners (CR2) is consistent with the requirements, its domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) has deficiencies significant to the proper functioning of elements of the AEOI Standard. Most significantly, Poland’s legislative framework does not define the scope of Reporting Financial Institutions in line with the requirements nor does it have rules to prevent practices intended to circumvent the due diligence and reporting procedures.

The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.

Conclusions on the legal framework

General context

Poland commenced exchanges under the AEOI Standard in 2017.

In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Poland:

• enacted the Act of March 9, 2017 on exchange of tax information with other countries; and

• made reference to the Act of November 16, 2000 on countering money laundering and terrorism financing for the purposes of the identification of Controlling Persons under the AEOI Standard.

Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2017 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2018.

With respect to the exchange of information under the AEOI Standard, Poland:

• is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2017;

• has in place European Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation as amended by Directive 2014/107/EU; and

• has in place European Union agreements with five European third countries.1

Detailed findings

The detailed findings for Poland are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (www.oecd.org/tax/transparency/documents/aeoi-terms-of-reference.pdf).

CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.

Determination: In Place But Needs Improvement

Poland’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the scope of Reporting Financial Institutions required to report information (SR 1.1) and the framework to enforce the requirements (SR1.4). Most significantly, Poland’s legislative framework does not define Financial Assets in accordance with the requirements nor does it contain rules to prevent practices intended to circumvent the reporting and due diligence procedures.

SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.

Poland has defined the scope of Reporting Financial Institutions in its domestic legislative framework in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. Most significantly, Poland’s legislative framework defines Financial Assets through an exhaustive list, which is not in accordance with the requirements. This is a key element to the definition of Reporting Financial Institution and is therefore material to the proper functioning of the AEOI Standard.

Recommendations:

Poland should amend its domestic legislative framework to define Financial Asset using an inclusive approach as contained in the AEOI Standard, rather than using an exhaustive list.

Poland should amend its domestic legislative framework to require the term Investment Entity to be interpreted consistently with the language defining “financial institution” in the Financial Action Task Force Recommendation, although it is noted that the non-binding Explanatory Memorandum instructs that the interpretation of the Act be commensurate with the Commentary.

SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.

Poland has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary. While a deficiency has been identified concerning New Accounts opened during a transitory period, as alternative procedures were required and as the transitional period ended in on 30 April 2017, this is considered to be relatively minor and its impact not to be material.

Recommendations:

Poland should ensure that New Accounts opened during the transitory period of 1 January 2016 to 30 April 2017 are subjected to due diligence procedures that are in accordance with the AEOI Standard.

SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.

Poland has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.

Recommendations:

No recommendations made.

SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.

Poland has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Poland’s legislative framework does not include rules to prevent Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the reporting and due diligence procedures as required. This is a key element of the required enforcement framework and is therefore material to the proper functioning of the AEOI Standard.

Recommendations:

Poland should amend its domestic legislative framework to include rules to prevent Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures. While it is acknowledged that the mandatory reporting requirements in place will facilitate the identification of such practices, additional rules are needed to prevent such practices.

CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.

Determination: In Place

Poland’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Poland’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Poland and that meet the required standard in relation to confidentiality and data safeguards). (SRs 2.1 – 2.3)

SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.

Poland has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.

Recommendations:

No recommendations made.

SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.

Poland put in place its exchange agreements without undue delay.

Recommendations:

No recommendations made.

SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.

Poland’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.

Recommendations:

No recommendations made.

Comments by the assessed jurisdiction

As for the recommendation regarding SR 1.2, we would like to clarify that within our internal legal framework Financial Institutions are obliged to contact the account holders and request self-certification (with information on the residence as at the date of account opening) in order to document all accounts opened between 1 January 2016 and 30 April 2017 (apart from application of due diligence procedures for pre-existing accounts which they also have to apply). Based on current reporting status, financial institutions carried out most of required due diligence activities, with updated information subsequently transferred by the Polish tax administration to other countries participating in the CRS exchange.

We would like to underline that the Polish definition of Financial Asset includes all of the examples of assets listed within the paragraph 7 of the Section VIII of the Model Rules. At the same time, we want to emphasize that, although the list itself is exhaustive, the items listed in it (e.g. “security”) are not strictly defined in the Polish internal legal framework. Therefore, due to the broad and not strictly limited scope of the items included within the list, the definition allows a wide range of various assets to be covered.

As per the recommendation in respect of the definition of Investment Entity, we would like to add that we have published an official explanation (on the official website of the Ministry of Finance: https://www.gov.pl/web/finanse/informacja-w-sprawie-interpretacji-pojecia-podmiot-inwestujacy) in which we clearly state that the interpretation of term must be consistent with the Directive as well as the CRS standard (by extension, AML framework). We believe that our communication in this matter (although it is non-binding) leaves no doubt as to market practice in the interpretation of the term of Investment Entity.

Nevertheless, Polish Ministry of Finance is reconsidering the further recommendations related to the enforcement framework and to introducing adjusting amendments in the legal definitions of financial assets and investment entity.