Poland

Corporate - Taxes on corporate income

Last reviewed - 10 June 2022

The CIT is the only tax levied on corporate income. The standard CIT rate is 19%.

However, the CIT rate of 9% can be also applied for income other than capital gains if the taxpayer:

  • is a small taxpayer (i.e. taxpayer whose value of sales revenue – including the amount of VAT due – did not exceed in the previous fiscal year, the amount corresponding to the equivalent of EUR 2 million, expressed in PLN) or
  • started its business activity, if the establishment of the company was not a result of transformation or merger (in the first tax year).

The lower rate rate does not apply to tax capital groups and as a result of certain restructuring operations (mergers, contribution of a going concern etc.).

Polish tax residents are subject to tax on their worldwide income. Non-residents are taxed only on their Polish-sourced income. The tax authorities' right to tax a non-resident is further limited if the non-resident's country of residence concluded a double taxation treaty (DTT) with Poland. In this case, the Polish tax authorities are, as a rule, entitled to tax only the portion of the non-resident's income that may be attributed to a permanent establishment (PE) located in Poland if such income has arisen in Poland for the foreign tax resident. Exceptions relate to specific types of income, such as royalties, interest, dividends, and capital gains, which may be in Poland even if no PE exists.

As of 1 January 2022, a minimum income tax for taxpayers on  entities subject to CIT (incl. Tax Capital Groups), whose share of income in revenues (other than from capital gains) calculated for tax purposes will be less than 1%, or which will make a loss for a given tax year. . The  minimum income tax rate is 10%. 

The tax base is to be the sum of the following:

  • 4% of “operational” revenue (other than from capital gains) plus
  • "excessive" debt financing costs paid to related entities (generally exceeding 30% of the so-called tax EBITDA), plus
  • the value of deferred income tax resulting from the disclosure of unamortized intangible assets in tax settlements to the extent that it results in an increase in gross profit or a decrease in gross loss,
  • costs of intangible services or royalties paid to related entities (with the scope and definition similar to the current art. 15e), exceeding 5% of the so-called tax EBITDA plus PLN 3 million.

When calculating the amount of the tax, taxpayers will be entitled to apply exemptions from art. 18 of the CIT Act (R&D relief and new reliefs announced in the Polish Deal, e.g. for prototyping and robotisation) as well as deduct from the tax base an income resulting from the activity in the Special Economic Zone or the Polish Investment Zone.

The provisions will not apply, i.a. to financial enterprises, start-ups and taxpayers who recorded over 30% decrease in revenues.

The amount of the minimum tax paid for a given tax year may be deducted  from the due CIT calculated using the traditional method for consecutive 3 tax years immediately following the year for which the taxpayer has paid the minimum income tax.

Revenues resulting from the receipt of dividends or other payments from participation in the profits of legal persons are subject to WHT in Poland(see: the Withholding taxes section for more information).

The concept of exit tax exists in Poland and assumes a taxation of unrealised capital gains in the case of transfer of assets, change of tax residence (including cross-border transformation, which may be interpreted, e.g. as cross-border mergers), or taxpayer's PE outside the territory of Poland. The exit tax rate has been established at 19%. The tax base is the surplus of the market value of assets, with respect to which Poland would lose taxing rights, over their tax value. Under certain conditions, taxpayers may be able to apply for payment in instalments for a period not exceeding five years.

There is a separation of income/loss sourced from capital transactions from other income/loss sources. Taxpayers have to recognise revenues and costs related to each ‘basket’ separately. There is no possibility to set-off income derived from one ‘basket’ with loss borne in the other ‘basket’. Income in both baskets is taxed at 19% CIT. Apart from share/capital transactions, the capital basket includes royalties, license fees, and similar rights.

Polish companies with foreign participation may be set up as either limited liability companies, joint-stock companies, simple joint-stock companies, limited partnership or joint-stock limited partnership. There is no limitation on the percentage of foreign participation. Above mentioned types are subject to the general CIT rules, including the standard 19% tax rate (and other rates, depending on the type of revenue sourced in Poland). The same rate applies to branches of foreign companies (see the Branch income section for more information).

Certain entities are explicitly excluded from the group of taxpayers under the CIT law (e.g. Treasury, National Bank of Poland). Polish and European Union (EU)/European Economic Area (EEA) based investment funds are also exempted on the grounds of such provision.

There is a ‘minimum income tax level’ for taxpayers holding substantial real estate, which has initial value over PLN 10 million. The minimum threshold of PLN 10 million is applicable to a whole portfolio of buildings possessed by a given taxpayer. ‘Minimum tax’ is payable monthly at 0.035% of excess of the initial value of the building over PLN 10 million (0.42% annually). Consequently, tax will be due regardless of the level of actual income derived by the taxpayer. This minimum tax can be set-off against CIT if CIT is higher.

Optional tax rules (so-called ‘Estonian CIT’)

From 2021, a new system of taxation of capital companies was introduced into the Polish legal system - the so-called “Estonian CIT”. Estonian CIT changing the moment of tax payment. Currently, entities pay CIT on the income earned in a given tax year. In the Estonian CIT model, the tax will be paid only when the income is distributed, e.g. in the form of a dividend. From 2022 the Polish Deal brings important amendments with regard to the scope and application of the lump-sum scheme of Estonian CIT.

The law is addressed to capital companies that meet the i.a. following criteria

  • the scheme can be used by  joint-stock companies, limited liability companies, limited partnerships, and limited joint-stock partnerships.
  • The shareholders are exclusively natural persons.
  • Have no shares in other entities.
  • Company employs, apart from the shareholders, at least three employees on the basis of an employment contract (or incur monthly salary expenditures in the amount of at least three times the average monthly salary).
  • Passive income does not exceed 50% of all company revenues obtained from its activities in the previous tax year, calculated including the amount of VAT due.

 The lump sum on income is paid at the moment of the payment of profit and in a different amount than the standard CIT. For small taxpayers and for taxpayers starting business activity on these principles, it is 10% of the tax base. In the case of other taxpayers, it is 20% of the tax base.

Local income taxes

There are no provincial or local income taxes in Poland.