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.
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Industries and investment incentives
Industries
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.
Investment incentives
In Poland, favoured investment incentives are provided in the following forms:
- tax exemptions
- grants
- investment loans on preferential terms
- preferential taxation when developing your business
Poland offers a wide range of investment incentives, especially for the following industries:
Company formation
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/
Corporate taxes
Corporate income tax
In Poland, the corporate income tax (CIT) rates are:
- 19%
- 9% for small taxpayers, and taxpayers starting up a business
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 CIT return is the end of the third month following the end of the year.
A company is considered as a Polish tax resident if it:
VAT
In Poland, VAT rates are the following:
- 23% standard rate
- 8% reduced rate
- 5% super-reduced rate
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.
Other taxes
Labour law and employment
Entitlement to work
In Poland, the following natural persons are entitled to work:
- Polish citizens
- EEA citizens
- Third country citizens with residence and work permits
Employment contracts
The following employment contract are available in Poland:
- Contract for indefinite period
- Contract for definite period
- Contract for trial period
Employee taxes and contributions
Taxes on personal income
The personal income tax (PIT) rates in Poland are:
- 32% or
- 12% stake based on individual income
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:
- have a permanent residence in Poland
- stay longer than 183 days in the country
Taxable incomes in Poland are net incomes from all income sources, that are not exempted.
Social security and health insurance contributions
The social security contributions rates for the employer are between 19.48% to 22.14% (accident insurance varies according to the number of employees insured and the business sector). The social security contributions rate for the employee is 13.71%.
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.
