Poland is positioning itself as a significant player among Germany's export partners, as two notable trends emerge according to the Polish Economic Institute. Firstly, there is a systematic rise in exports to Poland due to its economic growth, with Poland's share of German exports increasing by 1 percentage point since 2019. By January-November 2024, the value of German exports to Poland reached €87 billion. Conversely, exports to China have dropped significantly, by 8.5% and 7% respectively for 2023 and 2024, leading to China's share falling from nearly 8% of German exports in 2020 to 5.8% by 2024.
Poland has cemented its position as the fourth-largest recipient of German exports, experiencing the fastest growth rate among Germany's top twenty markets. Over the past six years, exports to Poland have averaged an impressive growth rate of 7.8%, as highlighted by Marek Wąsiński, head of global economy at the Polish Economic Institute.
Included within this growing trend is the observation of declining overall German exports, which dropped for the second consecutive year, falling 0.5% and 1.5% in 2023 and 2024 respectively. Despite this, when compared to 2019, German export values still reflect a 17% increase, yet, the ratio of exports to GDP has seen slight decreases, indicating potential underlying challenges.
An intriguing aspect of Poland’s economic profile is its linkage to German supply chains. Approximately 5% of the value of Polish exports is derived from German value-added components, highlighting the intertwined nature of their economies.
Meanwhile, another facet impacting Poland's economic fabric is the recent decision by former President Donald Trump to withdraw the United States from the global accord on imposing a minimum effective tax rate of 15% on the largest capital groups. This raises concerns for Poland as measures related to this global tax reform are already being implemented domestically from January 2025.
Experts express worries about potential repercussions of this withdrawal, as it complicates Poland's investment climate. The OECD's tax reform, originally agreed upon by member countries, aims to hold multinational corporations accountable by implementing effective tax rates. Poland's alignment with this plan could lead to adverse outcomes, particularly if other countries retaliate against nations adhering to the global tax standards.
Trump's administration has directed actions to explore potential countermeasures against countries whose tax regulations might conflict with American interests, including those implemented by Poland. With fears growing about losing significant investor interest due to these new regulations, calls for adaptations within Poland and the EU are becoming more vocal.
Under the OECD’s second pillar tax reform, large multinational corporations earning €750 million or more should adhere to the effective minimum tax rate of at least 15%. This global tax aims not only to secure revenue but to prevent profit shifting to lower-tax jurisdictions, yet questions remain about its efficacy.
Poland's approach to this global reform is underscored by its proactive measures, having adopted Directive 2022/2523 to guarantee this minimum level of taxation for both international and large national corporate groups. Countries like South Korea, Australia, Canada, Japan, and Vietnam have also adopted similar steps, yet others, particularly China, Russia, and India, have not.
Trump's withdrawal from the agreement is rooted in the belief it could cost the U.S. significant tax revenues—estimations suggest as much as $120 billion over the next decade. His administration contends the OECD’s stipulations may hinder the U.S. capacity to fully utilize domestic tax incentives to promote economic growth.
With the changes imposed by Trump, concerns loom over how these adjustments will impact the operational capabilities of U.S. corporations within the EU, including Poland. If EU nations impose UTPR (undertaxed payment rule) taxes on U.S. corporations operating there, the resultant tariffs or retaliatory measures would have expansive repercussions for nations like Poland, which depend on foreign investment.
There is recognition within the Polish Ministry of Finance of the possible adverse effects of the UTPR tax, calling for negotiations and potential amendments to improve the attractiveness of Poland as a destination for foreign investment.
Experts caution against the compounding impact of these tax reforms, particularly in the shifting investment environment. Poland has historically attracted investors partly due to tax incentives, which may be under threat as the OECD reforms compel reconsideration of its tax structures.
The urgency of addressing these economic uncertainties is underscored by the indecisive nature of global tax policy, wherein countries could either lose or gain investor confidence based on their stances and implementations. Wąsiński summarizes it aptly, stating, “the current environment challenges our ability to attract and retain the investments we require for growth.”
On the horizon, as Poland enhances its economic ties with Germany, it must simultaneously navigate the complex web of international tax policy and investment dynamics. The path forward necessitates both strategic planning and collaborative dialogue among EU partners to safeguard Poland's economic future amid these global challenges.