A short guide to Polish taxes
The three most important types of taxation in Poland are CIT, PIT, and VAT. In this article you can find out the most important facts about each of them.
CIT: Corporate Income Tax
The corporate income tax (CIT) is collected from legal entities based on their income. There are two flat rates. The general one is 19% for most types of activities. A lower rate of 15% is addressed to those starting a business and to taxpayers with the revenue (including the amount of VAT due) not exceeding EUR 1.2 million (expressed in PLN).
Any legal entity that is resident in Poland for tax purposes is subject to corporate income tax (CIT) on its income achieved worldwide. A company is considered a Polish resident for tax purposes if its registered office or management is located in Poland. For example, Polish subsidiaries of foreign companies are treated as Polish residents for CIT purposes.
Non-resident companies are subject to CIT on their income generated in Poland. Of course, taxation of non-residents will be different, provided that their home country has a Double Tax Treaty agreement with Poland.
The CIT-payers can be eligible for tax incentives in the form of the R&D relief or the Special Economic Zone tax relief.
PIT: Personal Income Tax
Polish tax residents are subject to personal income tax (known as PIT) on their worldwide income. A person is treated as a Polish resident (for tax purposes) if they have centre of their personal or economic interests in Poland or if they spend more than 183 days in a fiscal a year in Poland. Non-residents are subject to PIT only on their income received from the Polish sources.
Double taxation issues are resolved based on the relevant Double Tax Treaties or, Polish PIT provisions. In many cases, income tax paid abroad can be proportionally credited against one’s liabilities to Polish authorities.
Private taxpayers are entitled to reliefs and deductions (e.g. child benefits, charitable contributions, and joint settlements for married couples).
VAT: Value Added Tax
The Value Added Tax (VAT) system in Poland is analogical to the one used by other EU countries.
There are five VAT rates: 23% (the standard rate), 8%, 5%, 0%, and exemption. This tax is levied on supplies of most goods and services. The list includes:
- Supply of goods and services within the territory of Poland;
- Export of goods outside the territory of the EU;
- Import of goods from non-EU countries;
- Intra-community acquisition of goods (i.e. import of goods from EU member states).
- Intra-community supply of goods (i.e. export of goods to EU member states);
Entities conducting business subject to VAT should register as VAT taxpayers. The reporting period, in general, is one month. Small taxpayers are allowed to opt for a quarterly reporting period.
A detailed guide on Polish taxes can be found on Government’s website podatki.gov.pl.