Poland

PIT is levied on an individual’s overall income. The taxable base is calculated as the sum of income generated from all taxable sources, subject to a number of exceptions (i.e. some sources are taxed separately and left outside the overall income calculation).

Income from a particular source is defined as the surplus of revenue from such source over the tax-deductible costs related to the same source. If within one source of income tax-deductible costs exceed revenue, the result is a tax loss (see Losses in the Deductions section for more information).

Employment income

Employee revenue includes basic pay, overtime pay, supplemental pay, awards and bonuses, compensation for unused holiday or vacation time, and all other monetary amounts and benefits in kind, as well as all other services obtained for free, from the employer.

Entrepreneurs income

Individuals running business activities (as sole traders or as partners in partnerships) can opt for the tax scale or a flat 19% tax rate on their income, or lump-sum tax, or the so-called 'tax card' (tax card settlement discontinued from 01/01/2022; only 2021 users may continue, with no option to return if they opt out).  

Lump-sum tax on registered revenues is a simplified form of income taxation. The tax base is the revenue, so the costs are not deductible. After reduction of certain rates in 2022, for professionals in fields such as medicine, architecture, engineering, or specialist design, the rate is now 14%. Meanwhile, income from certain designated IT services is taxed at 12%.

Cash PIT 

Starting from 2025, entrepreneurs have the option to pay PIT after receiving the payment resulting from an invoice issued to the contractor for goods or services, providing certain conditions are met.  

This solution is intended for entrepreneurs who do not keep full accounting books, who settle taxes using the tax scale and flat tax (including those using IP Box), as well as lump-sum tax on recorded revenues, who are just starting a sole proprietorship, or whose revenues from the conducted economic activity did not exceed PLN 1 million (limit for 2025 tax year) in the year preceding the tax year. Starting from 1 January 2026 the limit has been raised to 2 million PLN. 

However, receiving part of a given amount due (e.g. in the form of an advance payment) already generates the obligation to pay PIT. The deduction of costs of obtaining revenues would take place at the time of payment of the given invoice (i.e. at the time of their actual incurring). 

Entrepreneurs who qualify under the regulations can opt for the cash PIT method by submitting a written statement to the tax office either by the 20th day of the month after starting their business activities, or by 20 February of the relevant tax year if they are continuing entrepreneurs who meet the criteria.  

The choice of the cash PIT is valid until a written revocation of the declaration is submitted (which must be submitted by 20 February of the tax year in which the entrepreneur would like to resign from cash PIT) or until the end of the year in which the entrepreneur met the required conditions. 

Note that an entrepreneur using the cash PIT is able to use this method only for transactions with other entrepreneurs who are not related entities, based on issued invoices for goods or services. Revenues from the sale of fixed assets and intangible assets for consideration are not subject to cash method settlement. In addition, the entrepreneur's additional obligations include: maintaining special records showing invoices subject to cash settlement, monitoring income and cost payments, and checking contractors in terms of the status of conducting economic activity. It should also be remembered that if the entrepreneur does not receive payment for goods or services in connection with the issued invoice, in this situation the deadline for recognising revenue and paying tax expires after two years from the date of issue of the given invoice. 

Capital gains

Transfer of real property

Transfer of real property, if made within the scope of regular business activity, is taxed on general rules. Consequently, it is added to other business income and taxed based on the progressive scale or the 19% flat rate.

However, special rules apply if the transfer of property is made outside the scope of business activity. These rules vary according to the date on which real property had been acquired.

Generally, sale of real property shall not be taxed if the sale is made after the lapse of five years after the end of the tax year when the property in question was purchased (i.e. property acquired in 2018 or earlier can be sold free of tax in 2024).

If the above exemption is not applicable, real property disposal is taxed at a 19% rate calculated on income. The income equals the difference between the revenue on sale and the cost of earning that revenue, increased by the overall amount of depreciation allowances (if any) made on the property in question before the disposal. Revenues earned from the disposal of residential real estate can be exempt from taxation in some cases.

Transfer of shares

Transfer of shares is taxed at a separate 19% rate calculated on income (revenue less expenses on acquisition). The income is not added to income from other sources.

Dividend and interest income

Income from dividends paid by joint-stock companies and limited liability companies is not added to an individual's overall income. Instead, it is subject to 19% tax calculated on revenue (deductions are not available). The same rules apply to interest on loans and savings.

An exception concerns loans granted within the scope of regular business activities. If this is the case, the PIT rules concerning business income apply.

Exempt income

More than 130 types of income are tax exempt. The most important are the following:

• Damages received on the basis of administrative law, civil law, and other legal acts (subject to numerous exceptions).
• Receipts from property insurance and personal insurance claims (subject to some exceptions).
• Cash equivalents provided to employees when they need to use their own tools, goods, and equipment to perform work.
• Limited daily allowances and other amounts due to employees for the duration of business trips.
• Revenue from specific sources earned by taxpayers up to age 26 (so-called 'relief for young').

Regulations of the Polish Deal introduced the following new reliefs from 2022 (tax exemptions):

• Interest on late payment of a tax-exempt receivable (beginning in 2022).
• Revenue from specific sources earned by taxpayers who:
• have transferred their tax residence to Poland (so-called 'relief for return')
• raise four children (so-called 'relief for families 4+'), or
• are seniors and remain active on the labour market (so-called 'relief for working seniors').

Special rules for non-residents

Specified types of income, if gained by non-residents, are subject to special treatment. See the Taxes on personal income section for more information.