Estonian CIT

From 2021, capital companies in Poland with a turnover of up to PLN 100 million that are owned exclusively by individuals will be subject to what is known as ‘Estonian CIT’ regulation. The shareholders will be able to settle their accounts in a very favourable manner, unless they decide not to take dividend payments.

This solution will be available to companies:

•  with no interests in other entities;
• with at least three employees in addition to the shareholders;
• with passive revenues not exceeding their operating revenues; and
• reporting capital expenditures.

To be eligible, a company must satisfy all these criteria jointly.

There are two options concerning Estonian CIT. The first is a full (comprehensive) taxation model applicable to distributable income. The second option allows for allocations made to a special fund (an investment account for deductible costs).

Those impacted by the legislation can choose a taxation model for four years and then extend it for further four-year terms, provided that they remain eligible. Additionally, taxpayers who have chosen the Estonian measure are required to report any increase in their capital expenditures by 15% within two years.