Foreign exchange permits and reporting
10.11.2011
capital markets
Although foreign exchange permits are rarely required in Poland anymore, companies must still remember about certain central bank requirements in this area.
The Foreign Exchange Law in Poland has been progressively relaxed for some time. Foreign exchange transactions may now be freely conducted for the most part, and it is rarely necessary to apply to the National Bank of Poland for an individual foreign exchange permit. Nonetheless, some transactions are still subject to certain foreign exchange requirements.
Transactions with non-residents of Poland from other member states of the European Union, the OECD or the European Economic Area are subject to less stringent requirements than transactions with “third countries”—i.e. countries that are not part of the EU, OECD or EEA. There are also various exemptions for individuals and businesses from countries with which Poland has concluded tax treaties.
A Polish resident (i.e. an individual residing in Poland or a business with its registered office in Poland) needs an individual foreign exchange permit in order to open a bank account in a third country or to acquire shares in a company with its registered office in a third country, participation units in funds from third countries, or securities issued by non-residents from third countries. A permit is also required in order to acquire claims from non-residents from third countries or to sell securities or claims in third countries.
Among other requirements, non-residents from third countries must obtain a foreign exchange permit to sell commercial paper, claims or other rights in Poland, unless they acquired them in Poland. A permit is also required to settle such transactions.
Polish residents are required to report certain transactions to the National Bank of Poland—generally under the condition that the assets or liabilities involved exceed certain legal thresholds. The reports are filed monthly, quarterly or annually using forms in the NBP’s electronic system.
For example, the NBP must be informed of the balance in foreign bank accounts. A resident must also file reports on holdings of shares, money market instruments, derivatives, investment fund units and other securities issued by non-residents. When residents issue debt securities or money-market instruments, they must file a report with the NBP if the issue is conducted on a foreign market or part of the issue is taken up by non-residents. It is also necessary to report to the NBP on the amount of receivables owed by non-residents or debts to non-residents, e.g. arising under commercial transactions, loans or finance leasing.
Other requirements include notification of shares and votes held in foreign entities in which a resident holds at least 10% of the votes. In the opposite situation, in which foreign entities hold at least 10% of the votes in Polish companies, the Polish companies must report this to the NBP. If a foreign business has a branch in Poland, the branch is required to file reports with the NBP.
Thus when carrying out foreign exchange transactions it is important to check whether the given transaction requires a foreign exchange permit, and if so to apply for it in advance. It is also important to determine, based on the executive regulations to the Foreign Exchange Law, whether the given transaction requires reporting to the NBP, and if so, the specific information that must be reported and the filing deadlines.
It should also be borne in mind that the Fiscal Penal Code provides punishments for violation of foreign exchange obligations. For example, for conducting a transaction without a required permit, a resident or non-resident may be punished with a fine of up to PLN 13 million and in some instances also imprisonment up to 2 years. Obtaining a foreign exchange permit under false pretences is punishable by imprisonment up to 1 year. A resident who fails to file a required report with the National Bank of Poland may be punished with a fine of up to PLN 5,500.
Danuta Pajewska, Capital Markets and Financial Institutions practices, Wardyński & Partners
