June 2024

Solar Power in Poland: Tax Preferences for Holding Structures

Structuring Solar Investment

A key aspect in properly structuring an investment in solar power is the tax implication of operating the business as well as its potential transfer within a capital group or exit by sale to an external party.

At the green-field stage, many projects are developed by one company within a simplified corporate structure to balance the high risk of not obtaining sufficient grid connection conditions (GCC) with the high costs of maintaining a complex corporate structure.

The above approach of using a simplified corporate structure activates the necessity to transfer projects as asset deals into special purpose vehicles (SPVs) at a later stage. This triggers additional risks due to various statutory restrictions applicable to the transfer of a relevant right/asset as part of a solar project.

However, the question remains whether in these kinds of investments, the corporate structure should be “flat” (projects reallocated into a simple SPV) or more complex, involving at least one holding level.

Tax Exemption for Holding Companies

Individuals and companies that invest in SPVs often face restrictions in exiting their current investments due to potential tax implications. In particular, if a Polish tax resident sells shares in an SPV, the resulting income is subject to 19% tax (either personal or corporate income tax).

This is where a tax exemption for holding companies comes into play. As of 2022, Polish regulations stipulate that profits from the sale of shares in SPs may be exempt from tax if it is carried out by a Polish holding company.

Applicability of Tax Exemption

To benefit from the exemption, the holding company has to engage in genuine business activity, and the SPV must be sold to an unrelated entity. Therefore, this exemption will not apply to a transfer within a given capital group, and it is recommended that the SPVs are already allocated within the holding company before commencement of the solar project development, or at least before the reallocation of the project as an asset deal.

Furthermore, the exemption does not apply if at least 50% of the value of the SPV’s assets is directly or indirectly linked to real estate located in Poland or to an interest in such real estate.

Tax-Exempt Sale of Solar Farms

This last condition effectively prevents real estate investors from benefitting from the exemption. However, this does not automatically mean that the sale of solar farms cannot be exempt from tax. Solar projects, in fact, constitute a collection of various rights, including (also in terms of value), the GCC, solar panels, and other devices, the right to auction support (if granted), and rights under long-term PPAs.

As a market standard, title to the land on which the solar projects are constructed is based on long-term leases (panels) and easements (cable, roads and other associated elements). Therefore, investing companies are tenants, not landowners (partly due to legal restrictions on selling agricultural land). This opens up the possibility of applying a tax exemption on the sale of shares in such companies.

There are many legal and economic arguments supporting such an approach, There are many legal and economic arguments supporting such an approach, including the fact that such rights are not listed as assets on the balance sheet and, in fact, each company (irrespective of their key business) needs to have at least a registered seat and office (thus, each company is a party to at least one such lease).

However, the above issue remains controversial as some tax authorities take the view that having an interest in real estate should be interpreted broadly including the rights under lease agreements. Even if such an approach is followed, the second ‘test’ applies to the ratio of the value of all SPV assets vs the value of the interest in real estate whilst taking into account that all panels and structures, connected for temporary use, are considered movable.


Considering the risk associated with some tax authorities taking the view that having an interest in real estate includes rights under lease agreements, it is recommended that, prior to structuring a transaction, a relevant tax authority interpretation is obtained, which under Polish law is binding.

Additionally, as the above exemption has been implemented only recently, we are monitoring the decisions of Poland’s administrative courts. If they confirm our conclusions, investment in the Polish solar energy market will become even more attractive, significantly increasing their appeal to real estate investors.

Originally published in GGI Insider 

For more information, please contact the authors: Head of Tax Piotr Prokocki or Partner Agnieszka Koniewicz