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Tax Guide Poland

Financial Year – 1 January – 31 December
Currency – Polish złoty (PLN)

Corporate Tax Summary

Residence – A company is resident in Poland if it has its registered office or management in the territory of the Republic of Poland (in the following „Poland“). The condition of having the management in Poland should not only be seen in the formal sense (i.e. the seat of the management body), but also in the sense of exercising a set of activities in Poland which functionally constitute the overall process of managing its activities and assets.

Basis of Taxation – If they have their registered office or management in Poland, taxpayers are subject to tax on all their income, regardless of where it is earned. Taxpayers without a registered office or management in Poland are subject to tax liability only on income that they generate in Poland. In particular, income (revenue) generated in Poland by taxpayers without a registered office or management in Poland includes:

  1. All types of activities carried out in Poland, including through a permanent establishment located in Poland.
  2. Real estate or rights to such real estate located in Poland, including the sale of it in whole or in part or the sale of any rights to such real estate.
  3. Securities and derivative financial instruments other than securities admitted to public trading in Poland as part of a regulated stock market, including those obtained from the sale of these securities or instruments and from the exercise of rights arising therefrom.
  4. Transfer of ownership title to shares (stocks) in a company, total rights and obligations in a company other than a legal entity or titles of participation in an investment fund, collective investment institution or other legal entity, or for receivables resulting from the possession of these shares (stocks), total rights and obligations or participation titles – if at least 50% of the value of the assets of such a company, a company which is not a legal entity, investment fund, joint investment institution or legal entity, directly or indirectly, is real estate located in Poland or the right to such real estate.
  5. Regulated receivables, including those made available, paid or deducted by natural persons, legal entities or organisational units without legal personality, domiciled or with a registered office or management in Poland, regardless of the place of conclusion of the contract and performance of the service.
  6. Unrealised gains.
Reference
Corporate Income Tax Rate (%) 19% / 9% / 5% / 0.035%* (*Income tax on commercial real estate with a value exceeding PLN 10,000,000) 19% of tax base.
9% of tax base on revenue (income) other than from capital gains – in the case of taxpayers whose revenue achieved in a tax year did not exceed the amount expressed in PLN corresponding to the equivalent of EUR 1,200,000, converted according to the average EUR exchange rate announced by the National Bank of Poland on the first business day of the tax year, rounded to 1,000 PLN.
5% of tax base tax on eligible income obtained from eligible intellectual property rights.
Income tax on commercial real estate, which:
1) Is the property or joint ownership of the taxpayer.
2) Has been brought into use in whole or in part on the basis of rent, lease or other contract of a similar nature.
3) Is located in Poland.
– Amounts to 0.035% of tax base for each month
Branch Tax Rate (%) 19% / 9% / 5% / 0.035%* (*Income tax on commercial real estate with a value exceeding PLN 10,000,000) As above
Withholding Tax Rate:
Dividends – Franked Not applicable Not applicable
Dividends – Unfranked 19 % Income tax on dividend income and other income (revenue) from the share in profits from legal entities having their registered office or management in Poland is set at 19% of the obtained income (revenue).
Dividends – Conduit Foreign Income 0% Revenue from the share in profits from legal entities is tax exempt, with the exception of income obtained by the general partner from the share in profits from a limited joint-stock partnership with its registered office or management in Poland, if the following conditions are jointly met:
1) The entity paying dividends and other revenue from the share in profits from legal entities is a company having its registered office or management in Poland.
2) The entity receiving income (revenue) from dividends and other revenue from the share in profits from legal entities, is a company which is subject to income tax on its entire income in Poland or another Member State of the European Union or in another country belonging to the European Economic Area, regardless of where it was earned.
3) The company referred to in item 2) directly holds not less than 10% of the shares (stocks) in the equity of the company referred to in item 1).
4) The company referred to in item 2) does not benefit from the exemption from income tax on all its income, regardless of the source of its achievement.
The exemption applies if the company receiving dividend income (revenue) and other revenue from the share in profits in legal entities having their registered office or management in Poland holds shares (stocks) in the company paying these receivables continuously for a period of two years.
This exemption also applies if the period of two years of uninterrupted holding of shares expires after the date on which this income (revenue) is obtained. In the event of failure to comply with the requirement of holding shares (stocks) for a continuous period of two years, the company is obliged to pay tax, together with default interest, on the applicable income (revenue) amounting to 19% of income (revenue) by the 20th day of the month following the month in which it lost the right to tax exemption. Interest is accrued from the day after the day on which the company took advantage of the exemption for the first time.
The exemption is applied accordingly to dividends paid to companies subject to income tax in the Swiss Confederation on all their income, regardless of where it was earned, with a direct percentage share in the equity of the company paying the dividend set at not less than 25%.
These provisions shall apply subject to double taxation avoidance conventions to which the Republic of Poland is a party.
Interest 19 % / 20%* 19 % tax on revenue.
20% income tax on interest earned in Poland by taxpayers with limited tax liability. The 20% rate applies taking into account the conventions on the prevention of double taxation to which the Republic of Poland is a party.
Royalties from Intellectual Property 19 % / 5% 19% of tax base.
5% – The tax on eligible income from eligible intellectual property rights of the taxpayer amounts to 5% of the tax base.
Fund Payments from Managed Investment Trusts 19 %
Branch Remittance Tax Not applicable
Net Operating Losses (Years)
Carry Back
Carry Forward The taxpayer may deduct the amount of losses from the source of revenue incurred in the tax year from:

1) The income obtained from this source in the next successive five tax years, except that the amount of the deduction in any of these years may not exceed 50% of this loss or

2) Make a one-time deduction of income from this source in one of the next five consecutive tax years of an amount not exceeding PLN 5,000,000; the non-deducted amount is settled in the remaining years of this five-year period, except that the amount of the reduction in any of these years may not exceed 50% of the amount of this loss.

Individual Tax Summary

Residence – A natural person is a resident of Poland, if:

  1. He/she has a centre of personal or economic interests in Poland (centre of vital interests), or
  2. He/she stays in Poland for more than 183 days in a tax year.

Basis of Taxation – Natural persons, if they reside in Poland, are subject to tax on all their income (revenue) regardless of the location of the sources of income (unlimited tax liability).

Natural persons, if they do not have a place of residence in the territory of the Republic of Poland, are subject to tax only on income (revenue) generated in Poland (limited tax liability). Income (revenue) generated in Poland includes, in particular, the income (revenue) from:

  1. Work performed in Poland on the basis of a service relationship, employment relationship, outwork and cooperative employment relationship, regardless of the place of payment of remuneration.
  2. Activities carried out personally in Poland, regardless of the place of payment of remuneration.
  3. Business activities conducted in Poland, including through a permanent establishment located in Poland.
  4. Real estate or rights to such real estate located in Poland, including the sale of it in whole or in part or the sale of any rights to such real estate.
  5. Securities and derivative financial instruments other than securities admitted to public trading in Poland as part of a regulated stock market, including those obtained from the sale of these securities or instruments and from the exercise of rights arising therefrom.
  6. Transfer of ownership of shares (stocks) in a company, total rights and obligations in a company other than a legal entity or titles of participation in an investment fund, collective investment institution or other legal entity, or due to receivables resulting from the possession of these shares (stocks), total rights and obligations or participation titles – if at least 50% of the value of the assets of such a company, a company which is not a legal entity, investment fund, joint investment institution or legal entity, directly or indirectly, are real estate located in Poland or the right to such real estate.
  7. Regulated receivables, including those made available, paid or deducted by natural persons, legal entities or organisational units without legal personality, domicile, registered office or management in Poland, regardless of the place of conclusion of the contract and performance of the service.
  8. Unrealised gains.

Filing Status – Joint settlement with the spouse is allowed, except when one of the spouses conducts business activities taxed with a 19% flat tax rate.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
Up to PLN 85,528 17% minus tax reduction amount(*) 17% minus tax reduction amount (*)
Over PLN 85,528 PLN 14,539.76 +32% of surplus over PLN 85,528 PLN 14,539.76 +32% of surplus over PLN 85,528

(*) The tax-reduction amount deducted in the annual tax calculation amounts to:

  1. PLN 1,360 – for the tax base not exceeding PLN 8,000
  2. PLN 1,360 reduced by the amount calculated according to the formula:
    PLN 834.88 × (tax base – PLN 8,000) ÷ PLN 5,000
    – for the tax base higher than PLN 8,000 and not exceeding PLN 13,000
  3. PLN 525.12 – for the tax base higher than PLN 13,000 and not exceeding PLN 85,528
  4. PLN 525.12 reduced by the amount calculated according to the formula:
    PLN 525.12 × (tax base – PLN 85,528) ÷ PLN 41,472
    – for the tax base higher than PLN 85,528 and not exceeding PLN 127,000
    Alternatively, a taxpayer conducting business activities may choose to tax all income with a 19% income tax flat rate.
    In addition, there is the possibility of taxing certain revenues from operations with a lump-sum tax on recorded revenues which, depending on the type of business, is: 20% / 17% / 8.5% / 5.5% / 3% and 2%.

Goods and Services Tax (GST)

Rate 23%, 8%, 5%, 0%

From 1 January 2011, the standard rate is 23%. The following reduced rates are used in the national VAT system: 8% and 5%.

An 8% rate is applicable, among others, to:

  • The supply of goods and services listed in Annex 3 of the VAT Act, which includes, among others certain processed food products, goods related to agricultural production, healthcare, services related to culture, sports, recreation, domestic services, passenger transport and others.
  • The supply, construction, renovation, modernisation, thermo-modernisation or reconstruction of buildings or parts thereof included in the construction covered by the social housing programme.

A 5% tax rate is applicable to the goods listed in Annex 10 of the VAT Act, which covers basic food products (e.g. some fruit and vegetables, bread, dairy products, meat and meat products, cereal products, flour, cereals, pasta , specific beverages), printed and published books on discs, tapes and other media, as well as specialist magazines.

A 0% rate is applicable, among others, to:

  • Export of goods, provided that before the expiry of the deadline for submitting a tax return for a given settlement period, the taxpayer receives a document that confirms the export of goods outside the territory of the European Union (EU).
  • The supply of goods to duty free zones or bonded warehouses.
  • International transport services.
  • Services consisting of the repair, refining or processing of goods.
  • The supply and import of vessels used for navigation on the high seas and carrying passengers for a fee or used for commercial, industrial or fishing purposes, and the supply of parts and equipment for these vessels if they are built in or used for their operation.
  • The supply and import of air transport equipment and spare parts thereto, as well as on-board equipment for air carriers operating mainly in international transport.
  • The supply of goods or services to: EU institutions or bodies set up by the EU, international organisations that have their headquarters or representative offices in the territory of a country other than the territory of Poland (recognised as such by the country of establishment and by Poland), NATO armed forces which have representation in the territory of a Member State other than that of the diplomatic missions and consular posts and members of their staff, as well as the United States Armed Forces.

The scope of taxation with a tax rate of 0% of the above mentioned goods and services, as well as the conditions for applying this rate, results from the provisions of Art. 83 of the VAT Act and the provisions of the Decree of the Minister of Finance on goods and services for which the tax on goods and services is reduced, and the conditions for applying these reduced rates.

Taxable Transactions The provisions on VAT apply to the following activities taxed in Poland (the provisions indicate the rules for determining the place of performance of the supplied services):

  • Paid delivery of goods, understood as the transfer of the right to dispose of the goods as the owner (in some cases, free delivery of goods by a taxpayer may be considered as paid delivery).
  • Paid provision of services, understood as any provision which is not a supply of goods (in some cases, services rendered free of charge may be considered as paid services).
  • Export and import of goods in Poland.
  • Intra-Community supply of goods.
  • Intra-Community acquisition of goods for consideration in Poland.

A transfer of a single-purpose voucher made by a taxpayer acting on its own behalf is also considered to be the supply of goods or services. This transfer of single-purpose vouchers shall be considered the supply of goods or services to which the voucher relates.
VAT is charged at every stage of the supply chain, whereby VAT taxpayers include VAT in the price of „taxed“ goods and services that they provide.

Registration Entities are required to submit a registration application to the head of the tax office before the date of the first taxable operation. Entities that benefit from a subject exemption and entities that perform only tax-exempt activities may submit a registration application.

Subject exemption is granted to taxpayers whose sales value did not exceed the total amount of PLN 200,000 in the previous tax year. The amount of tax is not included in the value of sales. Taxpayers with an annual turnover exceeding PLN 200,000 are required to register as VAT payers.

The subject exemption does not apply to taxpayers providing the following services:

  • Legal
  • Consultancy, with the exception of agricultural consultancy related to the cultivation and breeding of plants and animals, as well as related to the preparation of the development plan and modernisation of a farm
  • Jewellery
  • Debt collection, including factoring
  • Those not having a registered office in Poland
  • Those delivering goods listed in the VAT Act
Filing and Payment Taxpayers submit VAT returns and pay tax on a monthly basis (up to the 25th of the month following the end of the month). Small taxpayers can submit VAT returns and pay tax on a quarterly basis (up to the 25th of the month following the end of the quarter).

A small taxpayer is a VAT taxpayer whose sales value in the previous tax year (including tax amount) did not exceed the amount expressed in PLN which corresponds to the equivalent of:

  • EUR 1,200,000 or
  • EUR 45,000 euros for taxpayers who run a brokerage firm, manage investment funds, manage alternative investment funds, are agents, contractors or other persons who provide services of a similar nature, except for sales on commission.

Other Taxes Payable

Tax Reference
Payroll Tax Not applicable
Payroll Tax Stamp duty is applicable to:
1) Individual cases in the area of public administration:

  • Performance of an official act on the basis of a notification or on an application
  • Issue of a certificate upon request
  • Issue of a permit (permit, license)

2) Submission of a document confirming the granting of power of attorney or proxy, or extract, excerpt or copy thereof – in a matter of public administration or in court proceedings.
Stamp duty is also applicable to the performance of an official act, issue of a certificate and permit (permission) by an entity other than a government administration body, in connection with the performance of tasks in the area of public administration, as well as the submission to such an entity of a document confirming the granting of a power of attorney or proxy, or extract, excerpt or copy thereof.
The amount of stamp duty is set by amount, and specified in the Act of 16 November 2006 on stamp duty (Journal of Laws of 2019, item 1000).

Land Tax Real estate tax is applicable to: land, buildings or parts thereof, structures or parts thereof related to conducting economic activity.
The tax is charged to: owners, perpetual usufructuaries, independent owners and, in some cases, owners of dependent real estate or parts thereof owned by the State Treasury or a local government unit. The tax rate is determined by the resolution of the commune council. It takes into account the upper limits of rates which result from the Act of 12 January 1991 on local taxes and fees (Journal of Laws of 2019, item 1170).

Last updated: 31.12.2019

Contact us:

Attorney-at-Law in Poland
Nikodem Multan
Attorney-at-Law, Partner/Solicitor
ECOVIS Legal Poland
+48 22 400 45 85
Attorney-at-Law in Poland
Piotr Pruś
Attorney-at-Law, Partner/Solicitor
ECOVIS Legal Poland
+48 22 400 45 85