From September 18, 2014, PGE S.A. and 30 PGE Group companies are members of a tax group named "PGK PGE 2015".
PGE is a responsible taxpayer - both at national and local level. We are an important partner for local communities and local authorities. The taxes that we pay to the municipalities in which we operate often constitute a significant part of their budgets. (Discover more: Local communities).
For PGE Group companies - as economic entities - the taxation of income is of substantial importance (corporate income tax), as well as turnover taxes (VAT, excise duty) and property tax (tax on properties and means of transport).
From September 18, 2014, PGE S.A. and 30 PGE Group companies are members of a tax group named "PGK PGE 2015." The PGK agreement was signed for a period of 25 years and applies to the period after January 1, 2015. The PGK is represented by PGE S.A.
The act on corporate income tax treats tax groups as separate corporate income tax (CIT) payers. This means that companies comprising PGK PGE 2015 lose individual status for CIT purposes, and the taxpayer status goes to PGK PGE 2015 instead. Subject to taxation at PGK PGE 2015 is income calculated from total group revenue, as the excess of the sum of income of all companies within the group over their losses. PGK PGE 2015's separate status applies only for the purposes of corporate income tax. It should not be regarded as a separate legal entity. It also does not apply to other taxes. Particularly, every company within PGK PGE 2015 continues to be a separate payer of VAT, tax on civil-law transactions and personal income tax.
Pursuant to agreements, when a company belonging to the tax group shows tax profit, it transfers the relevant amount of income tax to PGE S.A., which then settles with the tax office as representing company. When a company belonging to PGK PGE 2015 incurs a tax loss, then the tax benefit is attributable to the representing company, i.e. PGE S.A. This also means that in the case of adjustments of the tax settlements of companies incurring a tax loss such change would have a direct impact on PGE S.A.'s standalone financial results.
Flows between companies being part of PGK PGE 2015 are realised throughout the year, within deadlines preceding advance payments for income tax. Final settlement between PGK companies takes place after the representing company submits an annual declaration.
Companies that make up the tax group must fulfil a number of requirements, including: appropriate level of equity, parent company's stake in companies belonging to PGK of at least 95%, no capital ties between subsidiaries, no tax arrears, income accounting for at least 3% of revenue (counted for the whole PGK) and execution of transactions with entities from outside the PGK on market terms. Breaching these requirements would mean the dissolution of the tax group and loss of the taxpayer status. Once dissolved, each of the companies within the tax group becomes a separate CIT payer.