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Poland’s already developed market is constantly emerging and is considered the biggest one in the CEE region. Its local economy has proven stability and immunity during the COVID crisis, which makes it a great destination during these turbulent and uncertain times.
Despite a relatively high inflation rate and issues with supply chain caused by the recent global situation, Polish economy shows relatively high and stable GDP of approx. 16.2%, according to the European Council ranked as the 3rd strongest economy in EC.
Attractive market with highly qualified employees, while still not as costly as in other EC jurisdictions, is a great “go-to” location, not only for passive equity investment, but also for R&D and logistic centers.
Wholesale and retail, manufacturing, agriculture, logistics and transportation and IT play a vital role in Poland’s economy and are considered the largest industries.
The strongest workforce in Poland is centered in the listed industries.
In Poland, favoured investment incentives are provided in the following forms:
Poland offers a wide range of investment incentives, especially for the following industries:
In Poland the most common legal form of business is a limited liability company (or LLC in short).
The incorporation time for an LLC is approximately 2-3 weeks. Registration in simplified procedures can be finished even within 24 hours. Tax ID is provided within 1-2 working days since registration in commercial register and registration to VAT takes up to 30 days.
The fee for establishing this type of company is PLN 600 of government fees. Other fees to consider are registered address fees, tax on civil law transactions in the amount of 0,5% of company’s capital, in case of not using simplified procedure the cost will increase by notary’s fee.
Setting up an LLC requires at least one shareholder (either individual or legal entity) and at least one director, who can be the same as the shareholder.
Official company register of Poland is open to public and can be accessible at https://ekrs.ms.gov.pl/
In Poland, the corporate income tax (CIT) rates are:
The reduced CIT rate of 9% can be applied for income, other than capital gains, if the taxpayer:
The tax period in Poland is the calendar year, ending either on 31 December, taxpayer may change the tax year starting and ending dates in articles of association.
The due date for filling the CIT return is by the end of the third month following the end of the year. The filing deadline cannot be extended. Polish tax residents are subject to taxation throughout the world, unless there is an appropriate double taxation treaty between Poland and which stipulates that foreign income is exempt from taxation in Poland. Foreign is exempt from taxation in Poland.
Non-residents are taxed only on income earned in Poland. Poland’s double taxation treaties may result in certain income not being subject to taxation in Poland regardless of its source.
There is a separation of income/loss derived from capital transactions (capital gains) from other sources of income/loss (also known as operating income/loss). Income and expenses related to each “basket” are disclosed separately. It is not possible to offset the income earned from one “basket” with the loss incurred in the other “basket.” Income in both baskets is taxed at a 19% CIT rate. In addition to share/equity transactions, the equity basket includes royalties, license fees and similar rights.
A company is considered as a Polish tax resident if it:
Has a registered seat in the country
Has a place of management located in the country
Polish VAT applies to the following activities:
In Poland, VAT rates are the following:
All resident registered companies in Poland should apply for VAT registration, with the exceptions of companies that had annual turnover of less than PLN 200,000 annually, or they sell only goods and/or services that are exempt from VAT Tax.
A non-resident company, established in another EU member state or in a third country, has to be registered for VAT in Poland if it has a permanent establishment in Poland from which, it can provide its services or goods, or when it carries out taxable transactions in Poland, for which it is not required to have permanent establishment, but they must pay Polish VAT.
As a general rule, output VAT is equal to input VAT minus output VAT (in other words, input VAT is deducted from output VAT).
Input VAT can be deducted from output VAT when a company (with VAT status) receives an invoice for goods or services purchased. Input VAT cannot be deducted unless the purchased supply is related to VAT-taxable activities. In addition, the deductibility of VAT is limited by the VAT Law with respect to the purchase of certain goods and goods and services. In addition, subject to a number of conditions, output VAT may be reduced when receivables arising from sales subject to VAT become uncollectible.
Excise tax is imposed on energy and electricity products, alcoholic products, tobacco products, other petroleum products.
Tax on means of transport
Tax on means of transport is charged on vehicles above 3,5 t, certain tractors and semi-trailers, buses.
Property tax is imposed for land that is not agricultural or forest, buildings, flats, or separated business premises.
Inheritance and gift tax
The closest family members from group 0 are exempted from tax, in case transaction was notified to Tax Office, outside of this group depending on the closeness of family members and classification on Tax group there are different tax rates: 3%, 7% and 12%.
Retail tax is based on excess of retail sales in particular month above 17 million PLN, 0,8% when the Tax base is not higher than 170 million PLN, and 1,4 % above it.
Tax on financial institutions
Tax on financial institutions applies on financial institutions such as: domestic banks, and branches of foreign bank, credit institutions, cooperative savings and credit unions, domestic insurance and reinsurance companies, branches and main branches of foreign insurance and reinsurance companies, or lending institutions. Tax rate is 0,0366% of the tax base per month. Taxed are assets of institutions.
Tax on civil law transactions
Tax on civil law transactions is imposed for only transactions indicated in Tax Act are the basis for this Tax, i.e., sales, loans, mortgage, incorporation of company.
Minimum income tax
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%.
Some payments made to non-residents are subject to WHT. The rate is 19% in case of dividends, and 20% in case of interest, license and management fees, fees for know-how, advisory, legal or accounting services.
Mineral Extraction tax
At the moment taxed are extracted minerals such as copper, silver, oil and natural gas.
In Poland, the following natural persons are entitled to work:
The following employment contract are available in Poland:
Polish tax residents pay PIT on their worldwide income. Non-residents are subject to Polish PIT on their Polish-sourced income only.
The personal income tax (PIT) rates in Poland are:
For personal income tax purposes, the taxable period is set as the calendar year.
The due date for PIT return is the 30 April of the following year.
Tax residents are considered the individuals who:
Taxable incomes in Poland are net incomes from all income sources, that are not exempted.
|Type of insurance||Paid by employer||Paid by employee||Total|
|Bridging Pension Fund (FEP)||0.00% or 1.50%||0.00%||0.00% or 1.50%|
|Accident Fund||0.67% – 3.33%||0.00%||0.67% – 3.33%|
|Employees’ Guaranteed Benefits Fund||0.10%||0.00%||0.10%|
|Total (up to limit)||19.48% – 22.14%||13.71%||33.19% – 35.85%|
|Total (past limit)||3.22% – 5.88%||2.45%||5.67% – 8.3%|
* Once an individual’s gross remuneration exceeds 30 average estimated national salaries for a given year (PLN 208,050 for 2023) the obligation to pay contributions toward these funds ceases
The health contribution is 9% of the base which is income less social security contributions. The health contribution is not deductible from income tax. As of July 1, 2022, selected groups of self-employed taxpayers again have the opportunity to deduct paid health contributions from income.