From September 18, 2014, PGE S.A. and 30 PGE Group companies are members of a tax capital group entitled PGK PGE 2015. The tax group agreement was executed for 25 years and is effective from January 1, 2015. PGE S.A. represents the tax group.
The act on corporate income tax treats tax groups as separate payers of corporate income tax (CIT). This means that companies within PGK PGE 2015 are not treated as separate entities for corporate income tax purposes, with PGK PGE 2015 being treated as one whole entity instead. PGK PGE 2015’s tax base will constitute the group’s aggregate income, calculated as the excess of the income of the companies that make up the group over their losses. PGK PGE 2015 is a separate taxpayer only for the purposes of corporate income tax. This should not be construed as a separate legal entity. It also does not apply to other taxes, especially each of the companies within PGK PGE 2015 continues to be a separate payer of VAT, civil law transaction tax and payer of personal income taxes.
Pursuant to the agreements, when a given company within a tax group shows a tax profit, it provides the relevant amount of income tax to PGE S.A., which as representative settles with the tax office. When a company that is a member of PGK PGE 2015 incurs a tax loss, the related tax benefit is attributable to the representing company, i.e. PGE S.A. This also means that in the case of tax settlement corrections for companies incurring a tax loss, such corrections have a direct impact on the separate financial results of PGE S.A.
Flows between companies belonging to PGK PGE 2015 are settled during the year, within deadlines preceding the payment of advances for income tax. Final settlement between tax group member companies occurs after the representing company files the annual return.