Poland: Compatibility of exit tax with EU law (CJEU referral)
Imposition of Polish exit tax on unrealized capital gains
A request for a preliminary ruling was published in the Official Journal of the European Union regarding case (C-430/25), which addresses the Polish exit tax imposed on unrealized capital gains payable by individuals planning to transfer their tax residence from Poland to another EU member state.
Under current Polish law, individuals changing their tax residence are subject to a 19% tax on unrealized gains when Poland loses the right to tax income from asset disposals. The taxable base is the excess of the market value of assets over their tax value, with reporting obligations triggered when the market value exceeds PLN 4 million (approximately €937,000). Tax can be paid immediately or in installments over five years.
The case involves a taxpayer with dual Italian and U.S. citizenship, who became a Polish tax resident on January 1, 2023, and plans to move to Germany in 2028. The plaintiff sought an advance tax ruling to determine liability for the Polish exit tax on unrealized gains upon changing residence. On December 31, 2024, Polish tax authorities confirmed the plaintiff's liability under Polish law. The taxpayer challenged the ruling, citing potential conflicts with EU law, particularly the EU Anti-Tax Avoidance Directive (ATAD) and CJEU case-law.
The Polish District Administrative Court raised questions about the compatibility of the Polish exit tax with EU law, focusing on three aspects: taxation of unrealized gains incurred before residency, exclusion of losses from the taxable amount, and the immediate or installment-based collection of tax upon change of residence.
Read an August 2025 report prepared by KPMG’s EU Tax Centre