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Tax essentials

Due to a favorable tax system, Poland is a very affordable place to do business. Here is an overview of what you need to know about taxes when setting up operation in Poland.

Due to a favorable tax system, Poland is a very affordable place to do business. Here is an overview of what you need to know about taxes when setting up operation in Poland.

CORPORATE INCOME TAX (CIT)

  • 19%
    • standard tax rate on income derived by the capital companies and the limited joint-stock partnerships
  • 9%
    • reduced rate for small taxpayers (whose gross income did not exceed EUR 2M in a preceding tax year or taxpayers who just start a business)

    9% tax rate may be applied to the amount of gross income not exceeding EUR 1.2M in a tax year. The reduced rate does not apply to taxation of capital income, dividends, or income from controlled foreign company (CFC)
  • 5%
    • income derived on intellectual property which was created, developed, or upgraded by a taxpayer within its R+D activity (so-called Innovation Box)

PERSONAL INCOME TAX (PIT)

PIT rates

  • 0%
    • for the individuals until the age of 26 for the income up to PLN 85,528 (does not apply to self-employed individuals)
  • 17%
    • for the income up to PLN 85,528
  • 32%
    • for the surplus over PLN 85,528
  • 19%
    • business activity (self-employed) – after submitting the declaration on the linear taxation

PIT exemptions

Some types of income, such as:

  • Return of business trip costs, like per diem, travel and accommodation expenditures;
  • Expenses incurred by an employer for education and enhancement of qualifications of his employees;
  • The value of some benefits paid by an employer due to the accommodation of employees.

VALUE ADDED TAX (VAT)

  • VAT rates 23%

    standard
    rate

    VAT exemptions
    • Delivery of certain goods and provision of certain services as specified in the Polish VAT Act (case by case check is required)
  • Reduced VAT 5% or 8%
    • Delivery of some goods and provision of certain services as specified in the Polish VAT Act (case by case check is required)
    0%
    • Export of goods
    • Intra-community delivery of goods
    • International transport

REAL ESTATE TAX

The following assets are subject to the real estate tax in Poland:

  • Land,
  • Buildings or parts thereof,
  • Structures other than buildings associated with conducting an economic activity.

The real estate tax rates are established individually by each Municipality and may vary for depending on the location of the investment sites. The national law sets the maximum rate for real estate tax rates. For example in Wroclaw, the real estate tax in 2020 are as follows:

  • Industrial/Commercial land - 0.95 PLN/ m2 annually;
  • Industrial/Commercial building - 23.89 PLN / m2 annually;
  • Structures - 2% of the initial asset value annually.

WITHHOLDING TAX

  • 20%
    • non-residents’ income derived in Poland such as e.g. interest or royalties
  • 19%
    • income from dividends and dividend-like instruments

The statutory withholding tax rate provided under Polish CIT Act (19%/20%) may be reduced based on a provisions of Double Tax Treaty concluded between Poland and the non-resident’s state subject to fulfillment of additional conditions. Case by case review is required to assess the applicable tax rate.

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