By Residence Angels
Relocation Company in Poland
Relocation Company in Poland
Corporate Taxes in Poland (VAT & CIT)
Reading time: 10 minutes
Corporate Taxation
Corporate income tax in Poland is imposed at either a 19% standard rate or a reduced rate of 9%, applicable to small taxpayers and new businesses within their inaugural year of operation.
Withholding Tax on International Payments
The term "withholding tax" refers to income tax, encompassing both corporate and personal, retained by payers whose permanent establishment (residence, office, or foreign establishment) is situated in the country where the income is generated.
A 20% withholding tax rate is applied to income from various sources, including interest, copyright, related rights, inventive designs, trademarks, decorative designs, the disclosure of confidential recipes or production processes, and the usage or rights to industrial devices. The tax burden can be alleviated through the application of EU Directives or double taxation treaties.
Similarly, a 19% withholding tax rate is enforced on dividend payments. Again, this tax burden can be mitigated through the application of EU Directives or double taxation treaties.
Starting from 2022, a "pay and refund" mechanism has been introduced, encompassing withholding tax at standard rates of 19% or 20% for specific payment categories to related parties, exceeding PLN 2 million.
Income Tax in Poland
General Information about Income Tax
Tax Advancements
Tax advances are to be computed and remitted by the taxpayer monthly or quarterly in the initial year, or if gross sales in the prior year did not surpass EUR 2,000,000. The basis for calculation comprises current taxable revenues and tax-deductible costs. The taxpayer can opt to estimate the tax based on the tax year preceding the previous year (current year â 2).
Deductions
Typically, expenses related to procuring, ensuring, and maintaining taxable income are fully deductible, unless categorized as non-deductible items. Certain items are deductible up to limits stipulated by law.
Carry Forward of Losses
Tax losses can be carried forward for up to 5 tax years. During each year, the company cannot utilize more than 50% of the loss. Loss from a specific source (business activity/capital gains) must be utilized within that same source. It is also possible to reduce the loss by an amount not exceeding PLN 5,000,000 at a time, with the remaining amount deducted in the subsequent years of the five-year period. However, the annual reduction may not exceed 50% of the loss amount.
Dividend Payments
Dividends distributed from profits are subject to a 19% tax rate. Nevertheless, exemptions under the EU Parent-Subsidiary Directive are applicable.
Minimum Tax
The minimum tax is imposed on companies, tax capital groups, and foreign entrepreneurs' permanent establishments that, in a tax year:
A significant aspect concerning the minimum CIT is the suspension of the regulations in this regard in 2023. Taxpayers will make the first payment for this tax in 2024.
Tax advances are to be computed and remitted by the taxpayer monthly or quarterly in the initial year, or if gross sales in the prior year did not surpass EUR 2,000,000. The basis for calculation comprises current taxable revenues and tax-deductible costs. The taxpayer can opt to estimate the tax based on the tax year preceding the previous year (current year â 2).
Deductions
Typically, expenses related to procuring, ensuring, and maintaining taxable income are fully deductible, unless categorized as non-deductible items. Certain items are deductible up to limits stipulated by law.
Carry Forward of Losses
Tax losses can be carried forward for up to 5 tax years. During each year, the company cannot utilize more than 50% of the loss. Loss from a specific source (business activity/capital gains) must be utilized within that same source. It is also possible to reduce the loss by an amount not exceeding PLN 5,000,000 at a time, with the remaining amount deducted in the subsequent years of the five-year period. However, the annual reduction may not exceed 50% of the loss amount.
Dividend Payments
Dividends distributed from profits are subject to a 19% tax rate. Nevertheless, exemptions under the EU Parent-Subsidiary Directive are applicable.
Minimum Tax
The minimum tax is imposed on companies, tax capital groups, and foreign entrepreneurs' permanent establishments that, in a tax year:
- Incur a loss from a source of income other than capital gains, or
- Have a share of income from a source other than capital gains not less than 2%.
- 5% of the value of the companyâs income other than from capital gains (currently 4%)
- Costs of debt financing exceeding 30% of the so-called EBITDA
- Costs of intangible services and royalties
A significant aspect concerning the minimum CIT is the suspension of the regulations in this regard in 2023. Taxpayers will make the first payment for this tax in 2024.
Tax Period
For corporate income tax, the tax settlement period is the tax year. The standard tax year spans 12 months, aligning with the calendar year but is subject to change. Tax advances are remitted monthly or quarterly throughout the year and reconciled annually.
Tax Returns and Assessment
Taxpayers are obligated to compute and declare revenues, tax-deductible costs, and tax liabilities in the yearly tax return (self-assessment). The deadline for submission is by the conclusion of the third month following the tax year's end, with no provision for extension.
For corporate income tax, the tax settlement period is the tax year. The standard tax year spans 12 months, aligning with the calendar year but is subject to change. Tax advances are remitted monthly or quarterly throughout the year and reconciled annually.
Tax Returns and Assessment
Taxpayers are obligated to compute and declare revenues, tax-deductible costs, and tax liabilities in the yearly tax return (self-assessment). The deadline for submission is by the conclusion of the third month following the tax year's end, with no provision for extension.
The Value Added Tax (VAT) rate in Poland is set at 23%. Poland's VAT regulations align with the prevailing European Union (EU) legislation, and their fundamental principles closely resemble those of other EU Member States.
Under EU legislation, each Member State has the discretion to establish its own VAT rate. Consequently, tax rates vary across the States, and no two countries share the same tax rate. Additionally, EU legislation permits States to determine which goods and services are eligible for reduced VAT rates.
It's important to note that all the information presented in this article is sourced from the official Polish Tax Portal.
An 8% VAT rate is applicable to specific items outlined in Annex 3 of the VAT Act and Annex. These include:
- Goods provided for the Social Housing Programme (for residences not exceeding 150 square meters).
- Pharmaceutical products and diverse medical equipment for individuals with disabilities.
- Goods and services utilized in agricultural production.
- Newspapers and various types of periodicals, encompassing e-publications (excluding those primarily or entirely comprised of video or music).
- Daily essential food products like spices, sugar, and certain processed and preserved food items.
23%
8%
VAT Tax in Poland
A 5% VAT rate is applied to specific items outlined in Annex 10 of the VAT Act. These items include:
- Certain agricultural supplies.
- Essential everyday food items like bread, fish, meat, fruits, vegetables, bakery products, dairy products, juices, eggs, broths, soups, various homogenized and specialized dietary foods.
- Various products for children, infant and toddler food, and hygiene-related products such as nappies, pacifiers, car seats, sanitary napkins, and tampons.
- All types of printed books, audio books, and other forms of media.
- E-books and specific periodicals.
5%
Certain goods and services are subject to a 0% VAT rate, including:
- Goods exported to other countries.
- Intra-European Union supply of goods.
- Supplies falling under the 'TAX FREE for tourists' category.
- Supplies to dedicated free zones, customs warehouses, and international transport services.
- Sea vessels utilized for passenger transport, industrial, commercial, and fishing purposes.
- Specific EU import/export-related services.
0%
VAT in VAT out
Input VAT is the VAT within purchased goods or services' cost for your business. Output VAT is the VAT collected when selling goods and services, applicable if you're VAT registered. The VAT due is Output VAT minus Input VAT, where Input VAT can be deducted from Output VAT upon receiving an invoice.
In Poland, "vat naleĆŒny" refers to Output VAT, and "vat naliczony" refers to Input VAT. Monthly VAT reports are due by the 26th of the following month, and quarterly reports by the 26th of the following quarter. Polish VAT taxpayers must maintain proper business accounts per Polish Accounting Act.
In Poland, "vat naleĆŒny" refers to Output VAT, and "vat naliczony" refers to Input VAT. Monthly VAT reports are due by the 26th of the following month, and quarterly reports by the 26th of the following quarter. Polish VAT taxpayers must maintain proper business accounts per Polish Accounting Act.
How to check VAT registration number of Polish company?
To check the VAT registration number of a Polish company, you can follow these steps:
1. Online Database:
Visit the European Commission's VIES (VAT Information Exchange System) website specifically designed to check the validity of a VAT number issued by any EU member state, including Poland.
- Go to the VIES website: https://ec.europa.eu/taxation_customs/vies/.
- Select "Poland" from the drop-down list.
- Enter the VAT number you want to verify.
- Click "Verify".
2. Polish Tax Authorities:
You can contact the Polish tax authorities directly for verification.
- Visit the Polish tax authorities' official website or contact their helpline to inquire about the validity of the VAT number.
3. Business Registry (KRS):
Check the Polish National Court Register (KRS) to verify the company's details, including its VAT number.
- Access the KRS website: [Polish National Court Register (KRS)](https://www.krs-online.com.pl/).
- Enter the company's name or registration number.
- Check the provided information, including the VAT number.
4. Contact the Company:
Reach out to the company directly and request their VAT registration number for verification.
5. Consult a Professional:
Seek assistance from a tax advisor or consultant specializing in Polish tax laws to ensure accurate verification.
By utilizing these methods, you can confirm the validity of a Polish company's VAT registration number.
Thank you for reading this article!
Read more about business in Poland:
Our services are designed to guide you through the process of establishing your company in Poland seamlessly. Here's an overview of what we offer:
1ïžâŁ Company Registration Assistance:
2ïžâŁ Corporate Document Preparation:
3ïžâŁ Bank Account Setup Assistance:
4ïžâŁ Establishment of Company:
5ïžâŁ Professional Accounting Services:
Our goal is to ensure a seamless and successful establishment of your company in Poland, handling all essential aspects efficiently and professionally.
1ïžâŁ Company Registration Assistance:
- We'll guide you through the entire company registration process in Poland.
- You'll receive a complete set of documents, including the articles of association and registration card.
2ïžâŁ Corporate Document Preparation:
- We meticulously prepare all necessary documents and provide translations in any language.
- If needed, we facilitate the addition of Apostille clauses to the documents.
3ïžâŁ Bank Account Setup Assistance:
- Our experts assist you in selecting the most suitable bank and handle the preparation of all required documentation for account setup.
4ïžâŁ Establishment of Company:
- We provide you with options for both actual and virtual office setups, along with utility bills essential for your company's establishment.
5ïžâŁ Professional Accounting Services:
- Our dedicated accounting team, based in Warsaw, comprises experienced Polish accountants who offer services in English.
- We ensure smooth financial management for your company.
Our goal is to ensure a seamless and successful establishment of your company in Poland, handling all essential aspects efficiently and professionally.