No Match Found
Poland has a relatively complex fiscal system. This is supported by the global Paying Taxes study: PwC annually assesses the ease with which tax obligations can be met. Paying Taxes compares the tax burden and compliance obligations of 190 countries around the world. Paying Taxes 2020 shows that Poland ranks 77 overall. This is caused by complicated legislation which is often amended, however the legislators are making lots of efforts to use technology to facilitate tax compliance.
Poland has a competitive statutory corporate income tax flat rate of 19 per cent. Small taxpayers, that is those that have not exceeded 1,2 mln of revenues or those that have started their business activity, can benefit from the 9 per cent flat rate, if certain conditions are met.
|Corporate income tax (CIT) rates|
|Headline CIT rate (%)||19|
|Corporate income tax (CIT) due dates|
|CIT return due date||Within three months following the end of the tax year.|
|CIT final payment due date||Within three months following the end of the tax year.|
|CIT estimated payment due dates||Monthly instalments paid by the 20th day of the following month.|
|Personal income tax (PIT) rates|
|Headline PIT rate (%)||32, plus 4% solidarity tax on income exceeding PLN 1 million|
|Personal income tax (PIT) due dates|
|PIT return due date||30 April|
|PIT final payment due date||30 April|
|PIT estimated payment due dates||20th day of the month following the month when the income was received.|
|Value-added tax (VAT) rates|
|Standard VAT rate (%)||23|
|Withholding tax (WHT) rates|
WHT rates (%)
Resident: 19 / NA / NA;
Non-resident: 19 / 20 / 20
|Capital gains tax (CGT) rates|
|Headline corporate capital gains tax rate (%)||Capital gains are subject to the normal CIT rate.|
|Headline individual capital gains tax rate (%)||
Transfer of real property: Subject to the normal PIT rate.
Transfer of shares: 19.
Polish tax residents pay PIT on their worldwide income. Non-residents are subject to Polish PIT on their Polish-sourced income only.
General PIT rules provide for the rates shown in the following table:
|Annual taxable income (PLN)||Tax rate|
|0||120,000||12% of the base less the amount decreasing tax (PLN 3,600)*|
||PLN 10,800 + 32% excess over PLN 120,000|
* In the case of income up to PLN 120,000, the tax is 12% minus the amount decreasing tax, which is PLN 3,600 (i.e. 12% of PLN 30,000, which is the tax-free amount of income).
The tax-free amount is set at PLN 30,000 and was introduced as of 1 January 2022. This means that taxpayers earning less than PLN 30,000 per year will be exempt from paying tax.
In the case of income exceeding PLN 120,000, the tax is PLN 10,800 + 32% of the excess over PLN 120,000. The decreasing tax amount is already included in the above sum of PLN 10,800.
Individuals running business activities (as sole traders or as partners in partnerships) can, instead of being subject to the tax scale, opt for a flat 19% income tax rate, lump-sum tax, or the so-called 'tax card'**, subject to certain conditions.
** Please note that the ‘tax card’ was liquidated as of 1 January 2022 as a method of tax settlement, and only taxpayers who settled in the form of a tax card in 2021 will still be able to use it; however, if they resign from this option, they will not be able to return to the tax card in the following years.
Capital gains (including dividend and interest income) are taxed at a flat rate of 19%. The tax-free amount does not apply to this income.
Currently, taxpayers can choose the method of taxation of rental income, i.e. taxation with a tax scale or a lump-sum tax on recorded revenues.
As of 2023, the rental income will be taxed only as a lump-sum tax on recorded revenues (8.5% rate for revenues below PLN 100,000 per year and 12.5% on the surplus over PLN 100,000). This means that the total rental income will be taxed without the right to deduct costs of earning income (e.g. maintenance costs, utilities).
Specified types of income, if gained by non-residents, are subject to special treatment. Namely, they are taxed at a flat rate of 20% calculated on revenue (cost deductions are not allowed) unless a double tax treaty (DTT) between Poland and the individual’s country of residence provides otherwise. These types of earnings include the following:
As of 1 January 2019, individuals who derive in a tax year income exceeding PLN 1 million are required to pay solidarity tax at the rate of 4% on the excess of this amount. An obligation of submitting a separate tax declaration by 30 April of the following tax year will also apply.
The CIT is the tax levied on corporate income. The standard CIT rate is 19%.
The reduced CIT rate of 9% can be applied for income, other than capital gains, if the taxpayer:
The lower rate does not apply to tax capital groups nor companies created as a result of certain restructuring operations (mergers, contribution of a going concern, etc.).
Polish tax residents are subject to tax on their worldwide income, unless there is an applicable double tax treaty in place between Poland and the relevant country that provides that the foreign income shall be exempt from taxation in Poland. Non-residents are taxed only on their Polish-sourced income. Double tax treaties concluded by Poland may result in specific income being not taxable in Poland irrespective of its source.
There is a separation of income/loss sourced from capital transactions (capital gains) from other income/loss sources (also referred to as income/loss from operational activities). Revenues and costs related to each ‘basket’ are disclosed separately. There is no possibility to set-off income derived from one ‘basket’ with loss borne in the other ‘basket’. Income in both baskets is taxed at 19% CIT. Apart from share/capital transactions, the capital basket includes royalties, license fees, and similar rights.
Polish companies with foreign participation may be set up as either limited liability companies, joint-stock companies, simple joint-stock companies, limited partnerships, or joint-stock limited partnerships. There is no limitation on the percentage of foreign participation. The above-mentioned types are subject to the general CIT rules, including the standard 19% tax rate (and other rates, depending on the type of revenue sourced in Poland). The same rate applies to branches of foreign companies (see the Branch income section for more information).
Certain entities are explicitly excluded from the group of taxpayers under the CIT law (e.g. Treasury, National Bank of Poland). Polish and EU/EEA-based investment funds are also exempted on the grounds of such provisions.
Revenues resulting from the receipt of dividends or other payments from participation in the profits of legal persons are subject to WHT in Poland (see the Withholding taxes section for more information).
Minimum Income Tax is a new tax obligation which is applicable to taxpayers declaring tax losses or negligible income (=<2% of the revenue).
The regulations are postponed until the end of 2023. As a result, the minimum tax will be applicable from 1 January 2024, and the first payment will occur in 2025.
The minimum income tax rate is 10%.
The tax base is to be the sum of the following:
It is possible to choose an alternative method of determining the tax base amounting to 3% of the value of revenues other than from capital gains in the tax year.
The provisions provide for a list of reductions from the tax base (e.g. the amounts of donations or R&D relief, for prototypes and robotization, SEZ/PIZ revenue, the value of expenses included in the tax year as deductible costs resulting from the acquisition, production or improvement of fixed assets, including through depreciation).
The minimum tax not apply, inter alia, to financial enterprises, start-ups, entities whose profitability in any of 3 prior years was no less than 2% and taxpayers who recorded over 30% decrease in revenues.
The amount of the minimum tax paid for a given tax year may be deducted from the due CIT calculated using the traditional method for the consecutive three tax years immediately following the year for which the taxpayer has paid the minimum income tax.
The concept of exit tax exists in Poland and assumes a taxation of unrealised capital gains in the case of transfer of assets, change of tax residence (including cross-border transformation, which may be interpreted as cross-border mergers), or change of taxpayer's PE outside the territory of Poland. The exit tax rate is established at 19%. The tax base is the surplus of the market value of assets, with respect to which Poland would lose taxing rights, over their tax value. Under certain conditions, taxpayers may be able to apply for payment in installments for a period not exceeding five years.
From 2021, a new, optional and autonomous system of taxation of companies was introduced into the Polish legal system - commonly referred to as 'Estonian CIT'. In this model, the tax is paid only when the income is distributed (e.g. in the form of a dividend). In 2022, the Polish Deal introduced important amendments with regard to the scope and application of the lump-sum scheme of Estonian CIT.
The scheme is addressed to entities operating as joint-stock companies, limited liability companies, limited partnerships or limited joint-stock partnerships that meet the following criteria:
The lump sum tax on income is accrued at the moment of the distribution of profit and in a different amount than the standard CIT. For small taxpayers and for taxpayers starting business activity on these principles, it is 10% of the tax base. In the case of other taxpayers, it is 20% of the tax base.
Considering the tax due from shareholders on profit distribution (at 19%) and special mechanism of reduction of PIT liability, the effective tax rate (i.e. combined CIT and PIT taxation) for Estonian CIT - assuming it is applied by the taxpayer for 4 tax years - is approx.:
The deadline for paying the lump sum tax has been extended to the end of the third month of the tax year following the year in which the profit was distributed (i.e. a resolution was adopted on the division or coverage of the net financial result or the net profit income was distributed).
In 2022 the new provisions regarding “diverted profits tax” were introduced (as part of the Polish Deal reform programme). The Act of 7 October 2022 amending, among others, the CIT Act (Polish Deal 3.0), also introduced further changes to the provision on diverted profits that apply as of 1 January 2023. Some of the introduced changes were defined as clarifying ones. As a result, it seems reasonable to consider the impact of the amendments not only on future but also on settlements for the tax year 2022.
This tax can be imposed at 19% on “diverted profits” understood as certain qualified costs (such as e.g. intangible services, royalties, debt financing cost or payments for transfer of functions, assets or risks) incurred - directly or indirectly - for the benefit of non-resident related entities and treated as tax-deductible by the Polish taxpayer, provided that:
Diverted profits tax is payable if the sum of qualified costs incurred in a tax year towards related entities constitutes not less than 3% of the sum of tax deductible costs incurred in that year in any form.
The burden of proving that a given expense does not meet the definition of diverted profit will rest on all Polish taxpayers making payments to foreign related entities.
As a “safe harbour” mechanism, the “diverted profits tax” should not apply if the above costs are incurred for the benefit of a related entity subject to taxation on its worldwide income in the EU / EEA (assuming that this entity conducts a genuine and material business activity).
Minimum tax on buildings is a special type of tax on kind of “deemed” taxpayer’s income from buildings, ie, initial value of the taxpayer’s buildings, decreased by 10m PLN.
The basic principles regarding minimum tax on buildings are as follows:
The taxable period is the calendar year (between 1 January and 31 December). Companies are entitled to choose another (than calendar) fiscal year (e.g. between 1 April and 31 March).
Companies are, in general, required to file their tax returns electronically. The annual CIT return should be submitted to the tax office within three months following the end of the tax year.
The same deadline as the CIT return applies to the settlement of the annual CIT liability. In financial terms, the final settlement is not significant since most of the annual liability is paid by CIT advances throughout the tax year.
The CIT advances should be paid for each month by the 20th day of the following month. Entities that started business activities (except for companies organised as a result of certain transformations) and entities whose gross sales revenue (including VAT) in the prior tax year did not exceed EUR 2 million are entitled to opt to make advance settlements on a quarterly basis (instead of a monthly basis).
As of 1 January 2020, each PIT, CIT and VAT taxpayer or tax remitter should transfer all of their Polish tax liabilities to a given tax office’s bank account using an individual tax account (‘tax microaccount’) identifying a given taxpayer or tax remitter. The tax microaccount may be checked using the generator or at any tax office.
Generating an individual tax account is not possible without the appropriate tax identification number. Taxpayers awaiting for a decision on granting the tax identification number (NIP), pay the amount due to the tax micro-account of a competent tax office.
The tax authorities generally shall notify its intention to initiate a tax audit. The inspection shall be initiated not earlier than after seven days and not later than 30 days from the receipt of the notice.
The duration of all audits in one calendar year may not exceed the following:
The rules mentioned above do not apply to the inspection commenced by the customs and revenue office. This kind of tax inspection is initiated without issuing a notification and in practice there is a possibility to prolong the inspection without any specific time limits.
Tax liability expires five years after the end of the calendar year in which the tax payment deadline passed. There are also situations when the statute of limitations can be suspended or interrupted (e.g. litigation).
In recent years we observe that the most inspections concern VAT - frauds and validity of the VAT refund (around 60%). This is undoubtedly related to the introduction of the Standard Audit File (JPK), submitted by all VAT payers. The focus of the tax audit authorities is also on transactions between related parties (transfer pricing issues) and tax restructuring.
General binding rulings are issued by the MoF in order to ensure the uniform application of tax law by tax authorities.
Individual binding rulings are issued at a taxpayer’s request in individual cases. A ruling should be provided in three months and is subject to the payment of a fee (immaterial amount). If no decision is taken within the deadline established, there is a tacit approval of the taxpayer's understanding of the tax matter.
The individual tax ruling provides protection only to the entity which requested the ruling. However, if the same factual state or future event applies to two or more taxpayers (eg, parties to the same transaction), they may submit a joint application for an individual tax ruling.
The ruling is not binding for the tax authorities (eg, tax offices and fiscal control offices) from the formal point of view. Nevertheless, according to the law, compliance with the interpretation should not lead to any harm to the taxpayer, ie, if the taxpayer follows the ruling, he should not be obliged to pay any penalty interest or be subject to fiscal-penal responsibility even if the tax authorities do not agree with the ruling in their proceedings.
In case of rulings covering future events (eg rulings obtained prior to closing of a given transaction), the taxpayer should also be protected not just against interest and penal fiscal liability, but also against the base tax liability.
Entities performing related party transactions may also apply to the Head of NRA for Advance Pricing Agreements (APAs) available under certain condition.
The entrepreneur being a party to the cooperation agreement will have the opportunity to discuss with the Head of the National Fiscal Administration important issues related to the tax settlements. Such arrangements may concern, among others:
The cooperation agreement may provide the taxpayer with benefits such as reduction (by half) of the fees for an APA and for a security opinion, as well as reduction (or, in some cases, even the lack) of interest on tax arrears. The cooperation agreement may also protect an entrepreneur against additional tax liability and the tax audit. Moreover, the custom and fiscal control of a taxpayer who is a party to the cooperation agreement will be carried out only by the Head of the National Fiscal Administration.
As of 1 January 2022, the so-called 'Investment Agreement', an agreement concluded between an investor and the tax authority that concerns the tax consequences of a planned investment in Poland, was introduced.
The Investment Agreement is a new solution that has not been previously present in the Polish tax system. The conclusion of an Investment Agreement is to protect the investor from the negative tax consequences more than individual tax rulings do. At the same time, it gives the investor an opportunity and an incentive to join the 'cooperation agreement' with the Head of the National Treasury Administration after the investment is made.
An Investment Agreement takes the form of an agreement concluded between the MoF and an investor, i.e. an entity that plans or has started an investment on the territory of Poland with a value of at least PLN 100 million (PLN 50 million from 2025). An Investment Agreement is addressed primarily to foreign entities planning to start a new business in Poland. Nevertheless, Polish residents are not excluded from benefiting from these regulations.
The regulations indicate two types of fees that investors will have to pay in order to enter into an agreement: an initial fee and a main fee. The initial fee, which is the payment for the application, is to amount to PLN 50,000 (from each investor filing in the application). The conclusion of an Investment Agreement is to be subject to a main fee of not less than PLN 100,000 and not more than PLN 500,000. The amount of the fee will depend on, among other things, the declared value of the investment and its complexity.
An Investment Agreement is to be equivalent to the following administrative acts:
The agreement may cover all or some of the above acts. It is valid for five years from the date of issue. It is possible to renegotiate its contents, resulting in changes to the agreement, including extending its duration.
In line with GAAR, legal transactions with the main purpose of obtaining a tax advantage contrary to the tax regulations shall not result in tax benefit. Tax consequences of such transactions will be assessed as if an alternative 'appropriate' transaction had taken place. Furthermore, if transactions carried out by a taxpayer do not have any real economic or business rationale other than tax avoidance, tax authorities may completely disregard them.
The GAAR is applicable to the tax benefits received after the amendments were introduced (i.e. 15 July 2016). This means that the sole fact that the transaction was carried out before the amendments entered into force may not exclude application of the regulations in case the taxpayer obtains a tax benefit after the GAAR is introduced.
As of 1 January 2019, there is a penalty payment in the form of an additional liability of 40% (or 10%) of the tax liability resulting from the application of the clause. Penalty payment also covers application of other anti-abuse clauses, transfer pricing settlements, and cases where the WHT payer issued an incorrect statement and did not make the required verification with reference to the WHT rate. The 10% rate may apply to income taxes where income constitutes the tax base.
The above penalty payment rate may be doubled in the case of tax benefits exceeding PLN 15 million, where the taxpayer has previously received a final decision on the basis of anti-abuse provisions, or in the absence of transfer pricing documentation. In certain circumstances, the above rates may also be reduced by half.
The applicability of the GAAR clause has been also extended to remitters. A number of detailed changes in the application of the GAAR clause has been introduced, including proceedings for issuing of a protective opinion by the Head of National Revenue Administration (NRA). The protective opinion is issued if the circumstances presented in the application indicate that the tax benefit described in the motion is not subject to GAAR. In case of the motions for issuance of the protective opinions, the Head of NRA analyses the case more deeply than in case of individual tax rulings (eg tax ruling fully relies on the descriptions of the backgrounds presented by the taxpayers).
The Polish tax Law also contains: (i.) other specific anti-abuse / anti-avoidance provisions dedicated to certain transactions / events (eg anti-abuse provisions in the CIT Law covering certain types of transactions / distributions such as mergers, dividend payments, interest payments or share-for-share exchanges); (ii.) “exit tax”; (iii.) anti-abuse provisions included in the VAT Law, (iv.) MDR.
Resident corporations are taxed on their worldwide income unless there is an applicable DTT in place between Poland and the relevant country that provides that the foreign income shall be exempt from taxation in Poland. In all other cases (in particular, when the income is not covered by any treaty), Poland uses the ordinary credit method to avoid double taxation. Therefore, a Polish resident is liable for income tax imposed on its worldwide income, but the tax is proportionately reduced by the income tax paid abroad.
At the end of June 2018, new regulations on applying for the income tax exemption due to the new investment implementation entered into force (so-called PIZ), which replaced the previous Special Economic Zones system. The biggest change is that the possibility to obtain a tax incentive does not depend on the location of the new investment, which does not necessarily have to be on the territory of a Special Economic Zone (SEZ).
The amount of the incentive (which is income tax exemption) is calculated exactly the same as within the SEZ system and depends on the:
The right to use the exemption is granted for 10, 12, or 15 years, depending on the investment’s location.
Applying for the income tax exemption within the PIZ requires declaration to meet numerous quality criteria. Some of them remain common for all types of investment projects. The minimum number of required quality points vary from 4 to 6 points out of 13 possible and depends on the investment location.
The core obligations regarding income tax exemption within the PIZ are:
Until the new regulation entered into force, Polish legislation provided investment incentives related to business activities carried out in 14 zones defined as SEZs. A business entity could benefit from tax incentives, provided that the entity obtained a permit from the Ministry of Economic Development to conduct business activities there and met other legal requirements. Note that a CIT credit applied only to income earned on activity conducted within the territory of SEZs and covered by permit. According to current regulations, the deadline for utilising the available tax credit from the previous SEZ system is the end of 2026 (previously 2020).
Entrepreneurs have the possibility of a tax deduction of costs incurred for R&D. The value of the deduction varies depending on the size of the company and type of eligible costs.
Eligible costs include the following six categories of R&D expenditures:
To benefit from the tax relief, each entity needs to perform R&D works and prepare a record of the eligible costs incurred in relation to R&D works in a given year. It is not important whether the R&D works end with success or the level of innovativeness of future effects of those works. Tax relief is also allowed for qualifying projects in progress (e.g. projects launched in previous years).
From 2018, there is an increase of the existing deductions in income taxes from 50% and 30% (depending on the category of eligible costs and the size of the taxpayer) to 100% of qualified costs, irrespective of their category and size of the taxpayer (which has hitherto differentiated the allowed deduction limits). This means that all taxpayers benefiting from R&D tax relief will be able to save in income tax PLN 19 on every PLN 100 of qualified costs starting from 2018.
Also, taxpayers may deduct expenditure incurred on employees that covers the costs of staff hired by taxpayers for R&D purposes under selected civil law contracts (previously only on an employment contract basis).
The R&D tax relief is available to taxpayers who, during the tax year, have operated in a PIZ on the basis of a decision on support, regarding eligible costs that were not recognised as costs of running the activity covered by the PIZ decision.
From 2022, there is an increase of the existing deductions in income taxes from 100% to 200% of qualified costs incurred on employees that covers the costs of staff hired by taxpayers for R&D purposes.
As of 1 January 2019, a new mechanism reducing tax rate to be applied to income derived from intellectual property (IP) rights (Innovation Box) has been introduced.
The Innovation Box scheme reduces, to 5%, the tax rate applicable to an income derived from IP rights.
The adjustment relates to the ratio of costs incurred on self-developed of IP rights in R&D activity and costs of subcontracting of R&D activity.
Taxpayers applying the Innovation Box scheme shall be entitled to benefit from the tax preference until a given right expires (20 years in case of a patented invention).
The tax preference applies provided that a taxpayer conducts R&D activity related to development, creation, or improvement of a given IP component. In order to benefit from the scheme, taxpayers will be required to separate the discussed income in their accounting books.
The new provisions complement the Polish innovative activities tax preferences system by supplementing the existing R&D tax relief. Previously, an entrepreneur introducing an invention to the market was required to tax income with a standard tax rate. Upon R&D relief, the entrepreneur is now entitled to a tax relief calculated on the basis of qualified costs incurred (e.g. on development of an invention).
A taxpayer commercialising the results of R&D and obtaining qualified income from it within the meaning of the IP Box provisions has the possibility of deducting R&D relief from the IP Box income of eligible costs incurred to develop the right covered by IP Box.
The innovative employees tax relief mechanism is an extension of the existing R&D relief. Taxpayers benefitting from R&D tax relief that had not been settled in the previous year are able to deduct it from advances for PIT paid by the employer due to:
The condition for the deduction will be that a given employee devotes at least 50% of the total working time directly to R&D activities in a given month. The deduction will be valid from the month in which the taxpayer submitted a tax return for a given year until the end of that tax year.
The relief for robotisation was introduced for a period of five years and covers expenses from the beginning of the 2022 fiscal year until the end of the 2026 fiscal year. It is available to both PIT and CIT payers investing in robotisation, regardless of the size of their operations. Entrepreneurs are additionally able to deduct 50% of the costs incurred for investments in robotisation.
The deduction is to apply in particular to:
The value of the deduction may not exceed the amount of income in a given tax year.
The prototype relief allows a deduction from the tax base of 30% of the sum of the costs of the trial production of a new product and the launch of a new product, but the amount of the deduction cannot exceed 10% of the income earned from sources other than capital gains in a tax year. It is an extension of the already existing R&D relief, and its scope covers the stage after completion of R&D works but before mass production of the developed product.
The deduction is limited to selected costs covering:
The costs incurred have to be shown in the annual tax declaration with the possibility of their deduction in the next six years following immediately after the year in which they were incurred.
The main purpose of the tax relief for expansion is the possibility of an additional deduction of the value of expenses related to the increase in revenues from the sale of products. The product may be an item already produced by the taxpayer or an item not yet offered by the taxpayer and not yet offered in a given country.
The relief may be settled on an ongoing basis, and the increase in revenues should be shown for two years, which requires monitoring of revenues obtained from products to which eligible costs were allocated.
Expenses for the expansion is eligible for a two-fold deduction up to the amount of PLN 1 million in a given tax year.
The costs associated with increasing revenues from the sale of products are:
The CSR relief enables the deduction of an additional 50% of selected costs from the tax base incurred on activities such as sports, culture, higher education, and science. The new preference, similar to the R&D relief in force for several years, is deductible in the tax return for the tax year in which the costs were incurred.
Eligible costs include:
The relief for IPOs allows for the deduction of costs incurred in the scope of the IPO.
The catalogue of eligible expenses is closed and is divided into the following two categories:
The expenses must be incurred directly for making the IPO, i.e. related directly and exclusively to the IPO, and incurred in the IPO year or in the preceding year, but not later than on the IPO date when the taxpayer introduced the shares to trading for the first time.
The taxpayer who bears the eligible expenses for the acquisition of shares in a capital company has the right to reduce its tax base by these expenses in the year in which they are actually incurred, while meeting the following conditions:
The maximum amount of the deduction in a tax year is PLN 250,000.
Eligible expenses subject to deduction include the following:
The deduction of expenses related to the acquisition of another company is possible in the tax year in which the taxpayer acquires shares in that company and applies to the amount of expenses incurred by the taxpayer in that tax year.
Polish VAT applies to the following activities:
The VAT rates are 23% (standard rate), 8%, 5%, 0%, and exemption.
The standard 23% VAT rate generally applies to the supply of all goods and services, except for those that are covered by special VAT provisions that provide other rates or treatments.
Supplies covered by a reduced rate of 8% include, among others, supplies of pharmaceutical products and passenger transport services and also supply of goods for the Social Housing Programme (no greater than 150 square metres).
Supplies covered by a reduced rate of 5% include books and journals, unprocessed food, and basic food.
Zero-rated activities include, among others, exports of goods to countries outside the European Union.
VAT-exempt supplies include, among others, certain financial, insurance, and educational services.
In the period from 1 February 2022 to 31 December 2022 - so as to counteract the effects of the inflation in Poland - the tax rate for the basic food products, other than classified according to the Polish Classification of Goods and Services under food and beverage serving services, has been reduced to 0%. It is expected that the reduced VAT rate will apply until June 30, 2023.
In general, the VAT due equals the VAT on outputs decreased by the VAT on inputs (in other words, input VAT is deducted from output VAT). Input VAT may be deducted from output VAT when a business (with a VAT payer status) receives an invoice for goods or services purchased. Input VAT may not be deducted unless a purchased supply is linked to the VATable activities. Furthermore, the deductibility of input VAT is restricted by the VAT law with respect to the purchase of certain goods and services. In addition, subject to numerous conditions, output VAT may be reduced when receivables, resulting from VATable sales, become uncollectible.
The amendment of the Polish VAT Act introduced regulations on the electronic database of taxpayers registered for VAT purposes in Poland.
As of 1 September 2019, the electronic database of taxpayers (‘White list’) was introduced. The list contains data on the VAT status of the entities, in particular:
The list is extended by the additional data (e.g. bank accounts numbers indicated in the tax forms filed to the tax office).
Obligation to settle expenses with use of bank accounts mentioned in the White list is applicable to transactions exceeding a value of PLN 15,000. Expenses paid via transfer to a bank account not included in the list cannot be treated as a tax deductible cost. Additionally, payments made to accounts not included in the list result in joint and several liability for VAT obligations of the supplier, in the amount equal to the VAT proportionally attributable to the transaction.
Above sanctions do not apply if the taxpayer notifies the head of the tax office about the payment made to an account other than the one included in the list within seven days from the date of the payment being ordered. During the period of the epidemic threat and the epidemic state announced in connection with COVID-19, the deadline for submitting the notification about the payment made to an account other than the one included in the list is extended to 14 days from the date of the payment being ordered.
As of 1 July 2018, split payment mechanism in B2B transactions has been introduced into the Polish VAT Law, replacing reverse charge for selected groups of goods and services. It assumes that the bank transfer is divided into net amount and VAT; the VAT amount is credited to a dedicated bank account of the seller. Cash deposited in a VAT account can be used only to pay VAT liability or other tax liabilities (CIT, PIT, excise duty, customs duty) and social security (ZUS) contributions or to pay the VAT shown on acquisition invoices to the supplier’s VAT account. Cash in a VAT account may only be sourced from VAT payments made by acquirers or refunds of VAT from tax authorities.
A mandatory split payment mechanism for B2B supplies of selected goods and services entered into force on 1 November 2019. Obligatory split payment applies only to transactions between taxpayers, which are subject to VAT in Poland, documented by invoices in which the total amount of receivables exceeds PLN 15,000 (gross). Foreign entities settling transactions by bank transfers, subject to VAT in Poland, are required to open a bank account in Poland.
The obligatory split payment mechanism applies to 150 product and service groups determined in accordance with the Polish Classification of Products and Services (PKWiU) of 2008.
In general, the following groups of goods and services can be distinguished:
The Polish VAT law allows direct refunds when input VAT (available for deduction) exceeds output VAT.
A Polish business may also be entitled to the VAT refund owed by another country under certain circumstances. Likewise, a foreign business having a seat or fixed place of business for VAT purposes outside of Poland may be, in most cases, entitled to the refund of Polish VAT. If the respective countries belong to the European Union, the procedure is substantially simplified due to the EU Directive, which provides favourable rules for businesses based in EU countries that are seeking VAT refunds in other EU countries (i.e. electronic VAT refunds are possible).
The treatment of international services largely depends on the place of supply since it is determinative of whether particular services are subject to the Polish VAT. The Polish VAT applies only to those services that are supplied within Poland.
Generally, the VAT reporting period is one month; quarterly reconciliation of VAT may apply to small taxpayers. VAT should be reported and reconciled by the 25th day of the month following the VAT reporting period. Legislation obligates the VAT-registered taxpayers (except those exempt from VAT) to keep computerised records of all data required to fulfill reporting obligations. Documents must be filed in the Standard Audit File for Tax (SAF-T) format, both in the case of an inspection and with respect to the VAT records.
From 1 October 2020, entrepreneurs are required to submit VAT SAF-T files in the extended version, including information from the VAT return (V7M, VDEK).
With the introduction of VDEK, the obligation to submit VAT returns in their previous form was abolished.
The option to form a VAT group, newly introduced to the Polish tax system (available to taxpayers as of 2023) is discussed in the Group taxation section.
According to the Polish Accounting Act the books of accounts shall be kept in an accurate and verifiable manner, without errors and on an up to date basis. Accounting books have to be kept in Polish currency (PLN) and in Polish language, meaning that the Chart of Accounts and descriptions of transactions recorded in the accounting books should be kept in Polish language. Companies should also have an Accounting Policy drawn up and approved by the Management Board in place. Polish accounting and tax law gives specific requirements for exchange rates that are to be used when translating amounts expressed in foreign currencies into PLN for accounting books and for tax purposes.