For businesses and investors looking to operate in Poland, grasping the country’s fiscal practices is crucial. Accounting in Poland, as a mix of local and international rules and standards, presents unique challenges and opportunities in this vital European market.

This expert article offers an in-depth look at the key laws and standards governing Polish accounting. We compare Polish Accounting Standards (PAS) with International Financial Reporting Standards (IFRS) and discuss the significant impact of digital technology, including the upcoming E-Invoice system (KSeF). This guide is designed to help you navigate the complexities of accounting in Poland, ensuring they are well-prepared for successful business operations in an interconnected global economy.

Structure and flexibility of the Chart of Accounts in Poland

In Poland, there is no imposed structure of the Chart of Accounts by the Ministry of Finance. Companies often use a model chart of accounts that was created based on the experience of Polish accountants and reporting needs to government institutions. However, companies can use corporate Chart of Accounts. The most important thing is the Accounting Policy that every company must have. Accounting Policy are the accepted principles chosen and applied by the unit solutions allowed by the act, including those specified in IAS.

Differences between Polish Accounting Standards (PAS) and International Financial Reporting Standards (IFRS)

According to the Polish Accounting Standards (abbr. PAS) entities obliged to present financial statements under IFRS are (PAS art. 45):

• issuers of securities on a regulated market within the EU, Iceland, Liechtenstein and Norway (joint stock companies listed on stock exchanges),
• financial entities: banks, insurers, investment funds and other entities operating in the financial sector.

However, there is also a possibility to use IFRS for some entities even if they are not obliged to do so (based on the decision of the body responsible for approving the financial statements in the company):

• joint stock companies intending to list their shares on a stock exchange,
• entities that are part of groups in which the parent entity applies IFRS (prepares consolidated financial statements),
• local branches of foreign companies that apply IFRS in their home country.

Below we have listed the major differences between the Polish Accounting Standards and International Financial Reporting Standards:

Financial statements in Poland: Mandatory reporting periods and key documents

According to the Accounting Act, companies should prepare a financial statement at the end of each financial year in the form specified by the Act, containing at least a balance sheet, income statement and additional information.

However, the financial statement template in Poland depends on the size of the company. Some companies can use simplification when preparing statements, but they must belong to micro or small companies. Below is information on what is meant by a micro and small company.

The financial statement of the company, self-balancing branches, must be prepared by the end of the third month after the end of the financial year, and approved by the 6th month after the end of the financial year. The company has 15 days to submit the approved financial statement to the appropriate register.

Auditing requirements in Poland: Size and revenue thresholds for mandatory audits

The financial statement audit by a certified auditor is subject to, among others, banks, entities operating on the basis of the provisions on trading in securities, joint-stock companies and others that have met at least two of the three conditions:

In accordance with art. 3 sec. 2 of the Accounting Act, the amounts expressed in euros are converted into Polish currency at the average exchange rate announced by the NBP on the balance sheet date.

Legal requirements for record keeping in Poland

According to the Accounting Act, accounting books should be kept in Polish and in Polish currency. The unit should have documentation describing in Polish the principles (policy) of accounting adopted by it, and in particular concerning:

1. determining the financial year and the reporting periods included in it;
2. methods of valuation of assets and liabilities and determination of financial result;
3. the manner of keeping accounting books, including at least:
   • the company’s chart of accounts, specifying the list of general ledger accounts, adopted principles of classification of events, principles of keeping auxiliary accounts and their links with general ledger accounts,
   • the list of accounting books, and when keeping accounting books using a computer – the list of data sets forming accounting books on computer data carriers, specifying their structure, mutual relations and their functions in the organization of the whole accounting books and data processing processes,
   • description of the data processing system, and when keeping accounting books using a computer – description of the information system, containing a list of programs, procedures or functions, depending on the structure of the software, together with a description of algorithms and parameters and program rules for data protection, including in particular methods of securing access to data and their processing system, as well as specifying the software version and the date of its operation;
4. the system for protecting data and their sets, including accounting documents, accounting books and other documents constituting the basis for entries made in them. In matters not regulated by the provisions of the Act, adopting the principles (policy) of accounting, units may apply national accounting standards issued by the Accounting Standards Committee. In the absence of an appropriate national standard, entities may apply IFRS.

Accounting books may be kept at the unit’s premises or outside of it (e.g. in an accounting office).

Approved annual financial statements, and a statement or refusal to make a statement, are subject to storage for a period of at least 5 years, counting from the beginning of the year following the financial year in which the financial statement was approved. The remaining sets are stored for at least the period:

The storage periods are calculated from the beginning of the year following the financial year to which the data sets relate.

Digitisation of accounting in Poland

According to the Accounting Act, accounting documents can be stored in electronic form, but in order to avoid tax problems, it is better to also have a paper version of the documents. However, accounting in Poland is changing with the introduction of the E-Invoice system (KSeF), which will require issuing and receiving invoices in electronic form. The above-mentioned invoices will be stored in the national E-Invoice System (KSeF).

Upcoming changes in Polish accounting regulations

The introduction of the electronic system and electronic invoices (mentioned above) will be a big challenge for companies both in terms of accounting in Poland and IT infrastructure. It forces companies to make big changes in accounting systems in order to connect to KSeF.

Brief overview of the Polish tax system

VAT in Poland: Registration, calculation, and payment processes

The value-added tax (VAT) in Poland includes a basic rate of 23% and reduced rates of 0%, 5%, and 8% for specific items like hygiene products, books, and food. Exports within and outside the EU may qualify for a 0% tax rate under certain conditions. The taxable amount includes all remuneration for goods or services, along with additional payments affecting the price.

Entrepreneurs in Poland can voluntarily register for VAT if their income is below PLN 200,000, while compulsory registration is required when turnover exceeds this threshold. From 2023, related entities can form a VAT group for joint settlement. Foreign entities conducting taxable activities in Poland must register before their first taxable activity. For EU distance sellers, the VAT registration threshold in Poland is PLN 42,000.

Corporate income tax in Poland: Rates, deductions, and filing procedures

In Poland, the corporate income tax (CIT) rates are:

• 19% standard rate
• 9% reduced rate

The reduced CIT rate of 9% can be applied for income, other than capital gains, if the taxpayer:

• is a small taxpayer (i.e. taxpayer whose value of sales revenue, including the amount of VAT due, did not exceed the amount corresponding to the PLN equivalent of EUR 2 million, in the previous fiscal year) or
• started its business activity, provided the establishment of the company was not a result of transformation or merger (in the first tax year)

In Poland, the tax year usually aligns with the calendar year, concluding on December 31. Taxpayers have the option to alter these start and end dates in their company’s articles of association. Filing the Corporate Income Tax (CIT) return is required by the third month’s end following the year’s close, and extensions to this deadline are not allowed.

The taxation system separates income from capital gains and other sources, each taxed at 19% CIT rate, and does not permit offsetting losses from one source against gains from another. This tax treatment includes income types like royalties and licensing fees.

Polish tax residents face taxation on their worldwide income, subject to exemptions under any applicable double taxation treaties. On the other hand, non-residents are taxed solely on income earned in Poland.