Taxation in Poland

Corporation Income Tax

A company (legal entity) that is resident in Poland for tax purposes is subject to corporate income tax (“CIT”) on its worldwide income. A non-resident company is liable to CIT only on income generated in Poland. Taxation of non-residents may be further limited, if the non-resident’s home country has concluded a Double Tax Treaty with Poland. 

A company is considered as a Polish resident if its registered office or management is located in Poland. Thus, Polish subsidiaries of foreign companies are treated as residents of Poland for CIT purposes.

The CIT is collected at the flat rate of 19% or 15% for small taxpayers (i.e. taxpayers whose value of sales revenue – including the amount of VAT due – did not exceed in the previous fi scal year, the amount corresponding to the equivalent of EUR 1.2 million, expressed in PLN) and for those starting a business.

Personal Income Tax

Polish tax residents are subject to PIT on their worldwide income. As a Polish PIT resident is treated a person, who has a centre of personal or business interests or spends more than 183 days in Poland in a year. It is enough to satisfy one of these conditions to become a Polish tax resident. Double taxation issues are resolved based on the relevant Double Tax Treaty. Otherwise, if no treaty applies, double taxation may be avoided based on the Polish PIT provisions. In general, income tax paid abroad may be proportionally credited against Polish PIT liability.

Non-residents are subject to PIT only on their income received from the Polish sources. 

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.

The taxpayers are entitled to enjoy with reliefs and deductions (e.g. child benefit, charitable contributions, joint-married tax reconciliation).

VAT

The system of Value Added Tax (“VAT”) in Poland is essentially similar as that used in the rest of the EU.

VAT is levied on supplies of most goods and services. Entrepreneurs conducting activities subject to VAT should register as VAT taxpayers. In general, VAT reporting period is a month, but part of a small taxpayers may also opt for a quarterly reporting period. Most of the taxpayers are obliged to prepare and submit SAF-T files without tax authorities request. Businesses conducting intra-community transactions or transaction on sensitive goods are also obliged to submit additional VAT returns reporting such transactions.

As a rule, VAT is effectively a tax on consumer expenditure, thus the final VAT burden should not fall on business activity. This is achieved through the mechanism of VAT calculation, which, under certain conditions, allows entrepreneurs registered as VAT taxpayers to recover input VAT (included in the price of purchased goods or services).

Polish VAT is levied on the following activities:

• 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);

Since January 1, 2011, the VAT rates are 23% (standard rate), 8%, 5%, 0% and exemption.