Equity-Based Incentive Programs in Multinational Corporate Groups
Preferential Tax Treatment Under Polish Law and the Approaching 2026 Legislative Reform
I. Introduction
Equity-based and financial-instrument incentive programs have become a standard feature of compensation architecture across corporate enterprises, including multinational group structures. Increasingly, such programs extend beyond senior management to encompass key specialists and mid-level professionals—a development that reflects broader trends in talent retention and interest alignment within complex organizations. As the prevalence of these arrangements grows, so too does the volume of unresolved questions concerning their proper tax treatment, particularly in cross-border contexts.
These questions do not arise in a legislative vacuum. The Polish Ministry of Finance has announced a comprehensive reform of the taxation of incentive programs, slated for implementation in 2026. The stated objective is to “tighten” the existing regime, curtail what the Ministry characterizes as impermissible tax optimization, and revise the rules governing the classification of income derived from such programs—with particular emphasis on arrangements structured through business-to-business (B2B) relationships. In practical terms, the proposed reform poses material risk for enterprises that have implemented incentive programs without rigorous tax analysis, and it necessitates a thorough reassessment of previously obtained rulings and interpretations.
Against this backdrop, a recent individual tax ruling issued by the Director of the National Tax Information Office (Dyrektor Krajowej Informacji Skarbowej, hereinafter “Director of KIS”) on January 16, 2026, merits close examination. The ruling (ref. no. 0112-KDIL2-1.4011.948.2025.2.JK) addresses the tax consequences arising from a Polish employee’s participation in an equity incentive program administered by a Luxembourg-domiciled parent company, and it affirms the applicability of the preferential tax regime under current law.
II. Structure of the Incentive Program
The taxpayer in question was a natural person subject to unlimited tax liability in Poland, employed under a contract of employment (umowa o pracę) by a Polish subsidiary forming part of a multinational corporate group headquartered in Luxembourg. The Luxembourg entity constituted the dominant undertaking (jednostka dominująca) within the meaning of Article 3(1)(37) of the Polish Accounting Act (Ustawa o rachunkowości).
Pursuant to a resolution adopted by the general meeting of shareholders of the Luxembourg parent company, the group established an incentive program—denominated the “IPO Share Award for Employees”—as an integral component of the group-wide compensation system. The program was linked to a planned initial public offering and was designed to align the personal interests of employees with the enterprise value of the group, while simultaneously incentivizing retention for a minimum period of one year following the admission of shares to trading on a regulated market.
The operative mechanics of the program were as follows. Each eligible participant received a so-called “IPO Award”—a conditional, gratuitous right to subscribe for Class “A” shares at a future date. This right was non-transferable, conferred no corporate governance rights, had no secondary market, and bore no ascertainable fair market value at the time of grant. Realization of the award was contingent upon the satisfaction of several conditions, including, inter alia, continuous employment for one year following the IPO date and compliance with the program’s governing regulations. Only upon fulfillment of these conditions would the Luxembourg parent company issue new Class “A” shares at market value, with the Polish employer—acting as the participant’s employing entity—remitting the subscription price on the employee’s behalf. The participant thus acquired the shares on an effectively gratuitous basis.
It bears emphasis that participation in the program was entirely voluntary and arose neither from the employment contract nor from any internal regulations of the Polish subsidiary.
III. The Core Tax Questions
The participating employee submitted two questions to the Director of KIS, each directed at the proper tax treatment of the arrangement:
- Timing of income recognition. Whether taxable income arises exclusively at the moment of the compensated disposal (odpłatne zbycie) of the shares—rather than at any earlier stage, including the grant of the IPO Award or the subscription of shares.
- Classification of income source. Whether the proceeds from the sale of shares acquired under the program constitute income from capital gains (przychody z kapitałów pieniężnych), taxable at the flat rate of 19% pursuant to Article 17(1)(6)(a) and Article 30b of the Personal Income Tax Act (Ustawa o PIT).
The taxpayer’s position rested on a straightforward syllogism. The program was established by resolution of the general meeting of shareholders of a joint-stock company; the shares in question pertained to a company domiciled in a state with which Poland has concluded a double taxation convention; and the participant acquired shares through the realization of an “other property right” (inne prawo majątkowe). Accordingly, the taxpayer argued, the statutory prerequisites of a “qualifying incentive program” under Articles 24(11)–(11b) and (12a) of the PIT Act were satisfied, warranting deferral of income recognition to the point of disposal and classification within the capital gains source.
IV. The Ruling: Confirmation of Preferential Treatment
The Director of KIS endorsed the taxpayer’s position in full. The authority confirmed that the program satisfied the statutory definition of an incentive program (program motywacyjny) within the meaning of the PIT Act. The ruling established the following operative conclusions:
- No taxable income arises at the moment of the conditional grant of the IPO Award.
- No taxable income arises at the moment of share subscription.
- No taxable income arises upon the employer’s remittance of the subscription price on the employee’s behalf.
- Taxable income crystallizes exclusively upon the compensated disposal of the shares and is properly classified as income from capital gains, subject to the 19% flat tax rate under Article 30b of the PIT Act.
The reasoning turned on the cumulative satisfaction of the following conditions: (i) the program constituted a compensation system established by resolution of the general meeting of a joint-stock company that is the dominant entity in relation to the taxpayer’s employer; (ii) the taxpayer derived employment income from the subsidiary within the meaning of Article 12 of the PIT Act; (iii) the taxpayer acquired shares through the realization of other property rights under the program; and (iv) the issuing company was domiciled in a Member State of the European Union with which Poland maintains a double taxation convention—namely, the Grand Duchy of Luxembourg.
V. Implications and the 2026 Reform Horizon
The ruling confirms that, under current law, properly structured incentive programs—including those administered by foreign parent companies within multinational groups—may benefit from Poland’s preferential tax regime for equity-based compensation. When the statutory prerequisites are met, employees of Polish subsidiaries can defer income recognition until the point of share disposal and avail themselves of the favorable 19% capital gains rate.
However, the legislative landscape is shifting. The proposed amendments signaled by the Ministry of Finance suggest that the period of relatively permissive optimization in the domain of incentive programs is drawing to a close. The Ministry has indicated, in particular, the following reform objectives:
Refined definitional scope. The proposed amendments would clarify the definition of a qualifying incentive program, including the explicit inclusion of subscription warrants (warranty subskrypcyjne) within the preferential regime.
Restrictions on B2B income classification. The reforms would curtail the ability to classify income from incentive programs as business income (przychody z działalności gospodarczej) under B2B arrangements—a change that would disproportionately affect sole proprietors (jednoosobowa działalność gospodarcza) utilizing lump-sum or tax card methods of taxation.
Source-attribution rules. A new principle of income attribution would assign proceeds from the realization of rights—including those arising from securities and derivative instruments—to the income source under which the underlying benefit was received, thereby impeding the practice of shifting income between tax categories.
Many existing structures, though formally lawful under the current statutory framework, are viewed by the Ministry of Finance as constituting impermissible tax optimization. While the draft amendments remain at the consultation stage, affected parties should already account for the risk that previously obtained individual tax rulings may lose their protective effect to the extent that the underlying statutory provisions are amended.
VI. Conclusion
The intersection of complex regulatory requirements, the cross-border dimension inherent in multinational group structures (encompassing foreign parent companies, double taxation conventions, and divergent national regimes), and the impending legislative changes renders the design and tax treatment of equity-based incentive programs an area of material legal and fiscal risk. For enterprises and their advisors, the current moment demands both a careful review of existing program architectures and proactive engagement with the evolving regulatory framework—before the reform window closes.
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Founder and Managing Partner of Skarbiec Law Firm, recognized by Dziennik Gazeta Prawna as one of the best tax advisory firms in Poland (2023, 2024). Legal advisor with 19 years of experience, serving Forbes-listed entrepreneurs and innovative start-ups. One of the most frequently quoted experts on commercial and tax law in the Polish media, regularly publishing in Rzeczpospolita, Gazeta Wyborcza, and Dziennik Gazeta Prawna. Author of the publication “AI Decoding Satoshi Nakamoto. Artificial Intelligence on the Trail of Bitcoin’s Creator” and co-author of the award-winning book “Bezpieczeństwo współczesnej firmy” (Security of a Modern Company). LinkedIn profile: 18 500 followers, 4 million views per year. Awards: 4-time winner of the European Medal, Golden Statuette of the Polish Business Leader, title of “International Tax Planning Law Firm of the Year in Poland.” He specializes in strategic legal consulting, tax planning, and crisis management for business.
