The three-level concept

The general concept of the transfer pricing documentation has been maintained. The three levels of reporting consist of:

Local file + Benchmarking

Represents local documentation containing details of transactions or other events between the Polish company and other group companies disclosed in the accounting books.

The taxpayer is obliged to prepare transfer pricing documentation in the case of perform a controlled transaction with a related entity, if its value exceeds the threshold indicated in the Act.*

The local file shall include in particular:

• Description of the taxpayer including description of the management structure and organisation chart
• Description of the main activities of the taxpayer
• Description of the transaction, including analysis of the functions, risks and assets
• Information about related entities (parties to the transaction)
• Transfer price calculation method
• Benchmarking analysis or compatibility analysis (obligatory part under the new regulations)
• Financial data
• Description of any agreements or tax interpretations related to the transaction (including Advance Pricing Agreements)
• The source documents (i.e. contracts).
• Description of any agreements or tax interpretations related to the transaction (including Advance Pricing Agreements)
• The source documents (i.e. contracts).

*PLN 2/10 millions

Benchmarking study is an analysis of the settlements between unrelated entities in transactions all over the market deemed as comparable to conditions established in controlled transactions. Benchmarking study is usually prepared based on specialized databases and market reports.

Comparability analysis’ goal is to prove that the terms and conditions under which the controlled transaction was executed comply with those which would have been determined by unrelated parties (transaction complies with arm’s length principle).

Entities obliged to prepare a TP documentation (local file + benchmarking study) are required to submit the statement that:

• The documentation has been prepared
• The prices applied to the controlled transactions are arm’s length.

Under the changes effective January 1^st, 2022, the statement is included in the TPR return.

The taxpayers who execute both transactions subject to the documentation obligation and transactions exempted under Art. 11n (1) of Polish CIT Law are obliged to submit TP-R report.

Master file

Master file should be prepared by taxpayers:

• Obliged to prepare TP documentation
• Members of a group of companies that consolidate the financial data with a full or proportional method, if the consolidated group revenues exceed PLN 200 000 000.

The master file shall include the following:

• Description of the entity preparing the documentation including the organizational structure
• The Transfer Pricing policy
• Description of the group’s business activity
• The group’s financial situation
• Detailed information on intellectual property (including especially the group strategy on creation, development and maintenance of intellectual property)
• Description of any agreements concerning income taxes made between the group components and the tax authorities in other countries (including unilateral APAs).

TPR

The TPR return requires the taxpayers to provide a detailed overview of transfer pricing surrounding, including the financial indicators, ratios and information of a given entity based on financial statements.

TPR is an obligatory part for entities which conclude controlled related party transactions fulfilling the criteria for transfer pricing documentation (simply, as a rule: if you are obliged to prepare Local File – then you have to submit TPR), as well as (in a limited scope) entities qualifying for the so-called domestic exemption under which they are not obliged to prepare transfer pricing documentation.

Country-by-country reporting (CbCR) and notification (CbCP)

The report on the global allocation of income and tax within the group (required for groups where the parent company consolidating the accounts is located in Poland) must be filed by the holding company if the consolidated revenues of the group exceed EUR 750 million.

The CBC-P notification is required to be submitted by each entity in the group to which the CbCR obligations apply. The CBC-P notification can only be submitted electronically, with the deadline set for 3 months following the end of the tax year.

Exceptions for documentation in transfer pricing in Poland

According to the current regulations, the following categories of transactions are not subject to Transfer Pricing documentation:

The cooperation agreements have been introduced to the Polish tax system due to the Act on Resolving Double Taxation Disputes and Concluding of Advance Pricing Agreements of 14^th November 2019.

The agreement may be concluded by taxpayers with revenues of at least 50 million EUR. The main benefits of the agreement are:

• Exemption from reporting of national tax schemes (MDRs)
• A 50% reduction of the fee for submitting an APA application
• Attributing good faith to the taxpayer.

The taxpayer, being a party to the cooperation agreement, has the opportunity to discuss (with the Head of the National Revenue Administration) important issues related to the tax settlements, such as:

• Interpretations of tax law
• Determinants of transfer pricing
• Non-applicability of the general anti-avoidance rule
• The amount of advance income tax
• Other, necessary to ensure the proper implementation of the cooperation agreement.

Basic and reduced VAT rates

The basic VAT rate in Poland is 23%. Reduced VAT rates of 0%, 5% and 8% apply to a wide range of goods which may change over time (special decree is issued in this respect). In general, lower rates apply to specific hygiene products, books, newspapers and food products. Each product or service should be considered individually.

Export within and outside the European Union

Taxable amount

The taxable amount is understood as any kind of remuneration received or due in exchange for the supply of goods or provision of service. The tax base also includes other additional payments of similar nature, which have a direct impact on the price of goods or services supplied by the taxpayer.

Local statutory representation for VAT

Statutory language

Communication with authorities

Companies in Poland are obliged to submit the JPK_VAT files containing both the VAT returns and the Standard Audit File (SAF), while the VAT records must be kept in an electronic system.

Tax period and deadline for JPK_VAT (SAF-T) filing

In Poland, there is no “traditional” VAT return, but there is a requirement to file a JPK_VAT (SAF-T) covering both the declaration part and the recording part of VAT settlements. The deadline for filing JPK_VAT (SAF-T) is the 25th day after the end of a settlement period. Taxpayers settling VAT quarterly submit monthly (to 25th day after the end of month) the recording part of JPK_VAT (SAF-T) and on
the 25th day of each month following the quarter submit the recording and declarative part of JPK_VAT (SAF-T).

Upon the demand of the authorities, the following electronic documents should be submitted:

• Accounting books (JPK_KR)
• Bank statement (JPK_WB)
• Magazine (JPK_MAG)
• VAT invoice (JPK_FA)
• Tax revenue and expense ledger (JPK_PKPIR)
• Income records (JPK_EWP).

EC sales list and other documents

EC sales list (or the so-called VAT_UE return) should be submitted electronically by the 25th day of the month for the previous month – the same time as in case of the JPK_VAT (SAF-T).

White List

Payment to an account outside the White List in certain cases involves joint and several liability and the exclusion of the expense from the tax-deductible costs for income tax purposes.

Split payment

• The net sale amount is credited to the supplier’s basic settlement account
• The VAT amount is paid to a dedicated VAT account that it automatically created by the bank as an additional account to every business/trading settlement account.

In principle, the use of split payments is voluntary and depends on the purchaser’s decision to apply it. However, in the case of making payments for goods or services listed in Appendix 15 to the VAT Act, documented with an invoice in which the total amount due exceeds the amount of PLN 15,000, purchasers are obliged to apply the split payment.

National System of e-Invoices (KSeF)

Taxpayers will not be obliged to issue electronic invoices in KSeF in 2025. KSeF remains a voluntary solution at this point. KSeF will be obligatory for domestic entities and all taxpayers with a registered office or permanent place of business in the country.

Employment contract types

There are three types of employment agreements in Poland:

The agreement for trial period can be concluded for a maximum of 3 months. This type of agreement can precede employment agreement for definite or indefinite period.

The agreement for definite period can be concluded for a maximum of 33 months. Moreover, it is possible to conclude only 3 of such agreements in a row. The agreement which exceeds the total of 33 months or is a 4^th agreement in a row will be considered as the agreement concluded for indefinite period.

All foreigners, EU, and non-EU residents can be employed on the basis of the same types of agreements as Polish citizens.

Non-EU residents

The procedure lasts approximately 2-3 months. Further, the work permit constitutes a basis to obtain working visa in the country of foreigner’s residence, that constitutes the legal basis to reside in Poland.

Citizens of Republic of Armenia, Republic of Belarus, Republic of Georgia, Republic of Moldova and Ukraine can perform work in Poland based on employer’s statement of intention to employ a foreigner.

The following conditions should be met:

• the foreigner cannot work longer than 24 months on such statement
• performed work cannot constitute seasonal work for which work permit is needed i.e. be performed for a period of not more than 9 months in a calendar year in the sectors of agriculture, horticulture, tourism as part of seasonal activities listed in the Regulation of the Minister of Family, Labour and Social Policy of December 8, 2017, on activity subclasses according to the Polish Classification of Activities (PKD), in which seasonal work permits for
  a foreigner are issued. The employer’s statement needs to be registered by Poviat Labour Office. The procedure takes approx. 9 days.
• the Ukrainian citizens has been temporarily enabled to apply for legalization of their work through a simplified procedure adopted in connection with armed conflict between Russia and Ukraine. This procedure allows for the legalization of work on Polish territory on the based-on notification to the Poviat Labor Office. The employer is required to notify the Labor Office within 7 days since the commencement of work of Ukrainian citizen.

EU residents

The work permit is not required in case of citizens of EU and EEA and Switzerland. Residents of these countries are allowed to perform work under the same conditions as citizens of Poland. However, if the foreigner (EU resident) plans to stay in Poland longer than 3 months, he/she should register his/her stay in provincial office.

Alternatives

There are 3 methods of terminating employment agreement in Poland:

Notice period

The employment agreements can be terminated by notice given by each party. The termination notice period depends on the period of employment. Notice periods for definite and indefinite period agreements are the following:

• 2 weeks if the employee was employed for less than 6 months
• 1 month if the employee was employed for at least 6 months
• 3 months if the employee was employed for at least 3 years

In case of agreement for definite and indefinite period, the employer’s notice of termination should state the reason justifying the termination.

The law in Poland does not provide the list of possible reasons, but according to Polish judicature, the reason should be real, concrete and understandable for employee.

In case of agreements for trial period, the periods of termination notice are the following:

• 3 business days if the trial period does not exceed 2 weeks
• 1 week if the trial period is longer than 2 weeks
• 2 weeks if the trial period is 3 months

Termination without notice

An employer may terminate an employment agreement without notice:

• in the event of a severe violation by the employee of the employee’s basic duties
• if the employee commits an offence, which prevents further employment in the occupied job position – if the offence is obvious or has been convicted by a final court judgement
• if the employee, through his/her fault, loses a license required to perform work in the occupied job position
• if an employee is unable to work as a result of an illness:
  • for more than 3 months – if the employee has been employed with a given employer for less than 6 months
  • for longer than the total period of receiving remuneration and welfare and sickness benefits on that account, as well as receiving rehabilitation allowance for the first 3 months – if the employee has been employed with a given employer for at least 6 months, or if the incapacity to work was caused by an accident at work or an occupational disease
• if an employee has any justifiable absence from work for other than aforementioned reasons, lasting for more than 1 month.

An employee may terminate an employment agreement without notice:

• if he/she received a medical certificate declaring a harmful effect of the work performed on the health of the employee, and the employer, within the period determined in the medical certificate, fails to transfer the employee to another position appropriate for his/her health condition and corresponding to his/her professional qualifications
• in the event of severe violation of employer’s basic duties, in such case the employee is entitled to compensation in the amount of remuneration for the notice period.

General requirements

Working time should not exceed 8 hours per day and an average of 40 hours per an average five-day working week. For the work performed in excess of the working-time standards employee is entitled to an allowance. If it’s justified by the type of work or the organization thereof, the employer can introduce the other working-time systems which allow to extend daily amount of working time. Specific requirements related to this matter are indicated in the Polish Labour Code.

Paid leave

Periods of previous employment, regardless of intervals in employment and how the employment relationship ended, are counted into the employment period determining the right to leave and the length of leave.

Graduating from the following schools means the following periods are counted into the employment of period on which the length of leave is based:

• basic or other equivalent vocational school – the duration of the education provided for by the syllabus, but not more than 3 years
• secondary vocational school – the duration of the education provided for by the syllabus, but not more than 5 years
• secondary vocational school for graduates of basic (equivalent) vocational schools – 5 years
• middle comprehensive school – 4 years
• post-comprehensive school – 6 years
• school of higher education – 8 years.

The periods of education cannot be aggregated.

If an employee attended school while being employed, the employment period determining the length of leave includes either the duration of employment while attending school, or the duration of attending school, whichever is the more favourable to the employee.

In the event of changing the employer during the year, the employee is entitled to paid leave as follows:

• with current employer – in an amount proportional to the period worked at this employer in the calendar year in which employment relationship ends, unless the employee has already used up or exceeded the leave he is entitled to
• with new employer – in the amount:
  • proportional to the time remaining until the end of the calendar year – if the employee is employed for a period not shorter than up to the end of the calendar year, or
  • proportional to the employment period in the calendar year – if the employee is employed for a period shorter than up to the end of the calendar year.

An employee who has exceeded the leave he/she is entitled to during employment (with the prior employer), is entitled to leave with the new employer in an appropriately reduced amount. The total length of leave within a calendar year cannot be shorter than the amount resulting from the employment period, as indicated above.

Time off from work due to force majeure

This time off may be granted for 2 days or 16 hours per year, in urgent family matters caused by disease or accident (employee retains 50% of his/her remuneration).

Carer’s leave

This leave is unpaid and can be granted to employees for 5 days per year. It can be granted to provide care to a family member who requires support for serious medical reasons.

Sickness leave

For the period of an employee’s incapacity to work, the employee retains the right to the sickness remuneration. The sickness remuneration is due in amount of 100 % or 80 % of regular remuneration depending on the cause of the incapacity. The employer is obliged to pay the sickness remuneration for the first 33 days of incapacity in any given calendar year. If the incapacity lasts longer the employee is entitled to receive sickness benefit paid by social security institution for a period of up to 182 days, including the previous 33 days of sickness remuneration in this limit of days.

Unpaid leave

When granting unpaid leave longer than 3 months, the parties may provide a possibility to recall the employee from leave for important reasons.

An employer can also grant an employee, with the written consent of the employee, unpaid leave to perform work at another employer for a period set out in an agreement concluded on this matter between the employers. The period of such leave is counted into the period of work on which the employee’ rights at the existing employer are based.

General aspects

According to Polish law, temporary work shall be understood as:

• seasonal, periodic, or casual work; or
• work that the employees of the user-employer would not be able to perform on time; or
• work that falls within the scope of duties of an employee of the user-employer who is absent.

The legal scheme of temporary employment is the following:

It shall be stressed out that the temporary employee remains the employee of the temporary work agency at all times. But it is the user-employer who instructs the temporary employee and subsequently supervises his work.

It shall be noted that unless regulated in Act on Employment of Temporary Workers otherwise, the provisions of the Labour Code and other labour laws concerning the employer and the employee apply accordingly to temporary work agency, temporary employee, and user-employer. The only exception is the regulation related to group redundancies.

Minimum requirements and limitations

The temporary work agency should agree with the user-employer in writing, at least on the following:

• the type of work to be entrusted to the temporary employee
• the qualifications required from the temporary employee to perform assigned work
• the expected duration of the temporary employment
• the working hours of the temporary employee
• the place of performing the temporary work
• the scope of information regarding the performance of the temporary work that affects the level of remuneration for the temporary employee’s work, as well as the method and deadlines for providing this information to the temporary work agency in order to correctly calculate the employee’s remuneration
• the extent to which the user-undertaking assumes the obligations of the employer with respect to health and safety at work
• the extent to which the user-undertaking assumes the obligations of the employer with respect to payments to cover business travel expenses

The user-employer shall also inform the temporary work agency about the remuneration and its structure (bonuses, fees, additional payments) and also health and safety conditions.

The temporary work agency may not assign the temporary employee with temporary work for a single user-employer for a total period of work exceeding 18 months within a period of 36 successive months. The user-undertaking can use the temporary employee for not more than 18 months within a period of 36 successive months. 

There is an exception only in a situation when the temporary employee performs temporary work for the benefit of a given user-employer in a continuous manner, and the work includes performing the tasks of an absent worker of the user-employer. In such a case the temporary work can be performed for maximum of 36 months. The break between the employment for the same user-employer shall last at least 36 months.

Temporary work agencies – obligations

The activity of temporary work agency is regulated by Polish state. In order to conduct such activity each entity should register in the National Register of Employment Agencies kept by the marshal of the voivodship. In order to be registered as a temporary work agency the following conditions shall be fulfilled:

• the entity cannot have tax, social security, health insurance and the Labour Fund, Guaranteed Employee Benefits Fund and the Bridge Pension Fund arrears
• the entity cannot be criminally recorded
• the entity cannot be subjected to bankruptcy or liquidation proceedings
• the entity should have real not virtual office.

The employment agency has an obligation to provide the marshal of the voivodship with a report on the activities of employment agencies – within January 31^st of each year for the preceding year – containing in particular the number of persons assigned to perform temporary work.

In the documents, announcements and offers the temporary work agency is obliged to disclose the registration number and label the job adverts for temporary employment as “temporary jobs”.

Freedom of business activity

Polish law stipulates the principle of freedom of business activity. This means that undertaking, pursuing, and terminating economic activity is free for everyone on an equal basis.

This applies to the performance of economic activity in areas of particular importance for the security of the state or citizens, or other important public interest. Granting of a license or a permit may be subject to the fulfilment of specific conditions, for example, no criminal records of board members.

Foreigners

Citizens of the European Union and European Economic Area Member States who want to conduct business activity in Poland may

The EU member states are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Greece, Spain, Netherlands, Ireland, Lithuania, Luxembourg, Latvia, Malta, Germany, Poland, Portugal, Romania, Slovenia, Slovakia, Sweden, Hungary, Italy.

The member states of the European Economic Area, apart from the EU member states, are Norway, Iceland, and Liechtenstein.

Citizens of the USA and the Swiss Confederation can establish a sole proprietorship, any commercial company, branch, or representative office in Poland.

Citizens of countries that do not belong to the European Union may:

• Set up a sole proprietorship or any commercial company in Poland, if they have a residence permit that entitles them to do so
• Set up a limited partnership, limited joint-stock partnership, limited liability, simple joint-stock company, and joint-stock company in Poland
• Join a limited partnership, limited joint-stock partnership, limited liability, simple joint-stock company, and joint-stock company, and acquire and take up shares or stocks in these companies
• Set up a branch of a foreign entrepreneur in Poland, if ratified international agreements signed with Poland do not exclude such a possibility

Minimum capital, minimum contribution

There are no requirements regarding the amount of company’s capital.

Business name

Minimum documentation

Next, the motion to the National Court Register should be prepared. The Registered Partnership is considered established from the date of its registration at the commercial register.

Details about shareholders

Each partner of a Registered Partnership is liable for the obligations of the company without limitation with all his assets jointly and severally with the remaining partners and the partnership. However, a creditor of the partnership may conduct execution from the partner’s assets only if execution from the assets of the partnership proves ineffective.

Each partner has the right to represent the company. The right of representation includes all acts in court and out of court and cannot be limited with effect towards third parties. The partner may be deprived of the right to represent the partnership only for significant reasons under a final and court decision.

Management of the affairs of the partnership may not be entrusted to third parties to the exclusion of the partners. Management of the affairs of the partnership may be entrusted to one or several partners under the articles of partnership or under a subsequent resolution of the partners. In such a case, the remaining partners are excluded from managing the affairs of the partnership.

Minimum capital, minimum contribution

There are no requirements regarding the amount of company’s capital.

Business name

Minimum documentation

Next, the motion to National Court Register should be prepared. The Professional Partnership is considered established from the date of its registration at the commercial register.

Details about shareholders

Only natural persons qualified to pursue liberal professions, i.e., legal advisers, notaries, doctors etc. can be partners of Professional Partnership.

A partner is not liable for the obligations of the partnership which arise in connection with the pursuit by the remaining partners of the profession in the partnership, or for the obligations of the partnership which arise as a result of acts or omissions of persons employed by the partnership under an employment contract or another legal relationship who have been guided by another partner in the provision of services connected with the objects of the partnership.

The articles of partnership may provide that one or more partners agree to be liable as a partner of a Registered Partnership.

Each partner shall have the right to represent the partnership individually, unless the articles of partnership provide otherwise. A partner can be deprived of the right to represent the partnership only for significant reasons under a resolution adopted by a majority of three-fourths of the votes in the presence of at least two-thirds of the total number of partners. The articles of partnership may provide for stricter requirements for such a resolution. Such depriving of a partner of the right to represent the partnership is effective from the date of registration of this fact in the commercial register.

The articles of partnership of a Professional Partnership may provide that the management of the affairs and the representation of the partnership be entrusted to the management board.

Minimum capital, minimum contribution

There are no requirements regarding the amount of company’s capital.

Business name

Minimum documentation

Next, the motion to National Court Register should be prepared. The Limited Partnership is considered established from the date of its registration at the commercial register.

Details about shareholders

There are 2 types of partners in a Limited Partnership: general partners and limited partners.

• A general partner is liable to the creditors for the obligations of the partnership without limitation
• A limited partner is liable only up to the amount specified in the articles of partnership. Such amount is set up individually for each limited partner. The limited partner is released from liability up to the value of contribution made to the partnership

Unless the articles of partnership provide otherwise, the limited partner’s contribution maybe made in a value lower than this specified amount. However, a decision of the partners to release the limited partner from the obligation to make a contribution shall be invalid.

The Limited Partnership is represented by the general partners, who are not deprived of the right to represent the partnership under the articles of partnership or a final and non-appealable court judgement. A limited partner may represent the partnership only as a proxy.

The affairs of the company are managed by the general partners. A limited partner does not have the right or obligation to manage the affairs of the partnership, unless the articles of partnership provide otherwise.

Minimum capital, minimum contribution

The minimum capital in a Limited Joint-Stock Partnership amounts to PLN 50,000. The nominal value of the share cannot be lower than PLN 0.01.

Business name

Minimum documentation

Next, the motion to National Court Register should be prepared. Like other partnerships, Limited Joint-Stock Partnership is considered established from the date of its registration at the commercial register.

Details about shareholders

In a Limited Joint-Stock Partnership there are 2 types of partners: general partners and shareholders.

• General partners are liable for the obligations of the partnership without limitation, while the shareholders are not liable for company’s obligations.
• The partnership is represented by the general partners, who are not deprived of the right to represent the partnership under the statute or a final and non-appealable court judgement. Any subsequent deprivation of a general partner of the right to represent the partnership should constitute an amendment to the statute and requires the consent of all the remaining general partners. A shareholder may represent the partnership only as a proxy.

Affairs of the company are managed by general partners. The statute may provide that management of the affairs of the partnership shall be entrusted to one or several general partners. An amendment to the statute depriving a general partner of the right to conduct affairs of the partnership or granting such right to a general partner who was previously deprived of such right shall require the consent of all remaining general partners.

Supervisory board

A supervisory board may be established in any Limited Joint-Stock Partnership. If there are more than twenty-five shareholders, the creation of a supervisory board is obligatory. The members of the supervisory board shall be appointed or revoked by the general meeting.

Under last year’s amendment to the Code of Commercial Companies, the powers and duties of supervisory boards have been increased, enabling them to request management bodies to prepare or provide any information, documents, reports, or explanations regarding the company.

Minimum capital, minimum contribution

The share capital of a Limited Liability Company shall be at least PLN 5,000. The share capital of the company can be divided into shares of equal or non-equal nominal value. However, the nominal value of a share may not be lower than PLN 50. The shares may not be subscribed for the amount below their nominal value. The amount of contribution shall not be lower than the share capital.

Business name

Minimum documentation

In contrast to the partnerships, capital companies can start their activity right after execution of the articles of association. Until the date of registration at the commercial register, capital companies are obliged to add to their business name the term “in organization” (in Polish “w organizacji”). After the registration, the companies obtain legal personality.

Also, the motion to the National Court Register must be prepared. Following documents should be attached to the motion:

• Articles of association
• Board statement that the contribution has been made by all shareholders in full
• The list of shareholders
• Resolution of shareholders on board appointment
• The board members’ statements concerning their addresses for delivery and consent for appointment on the position of a board member
• The document concerning full names and addresses for delivery or company’s name, or name and registered office of the members of the bodies or persons authorized to appoint the management board; if the shareholder is a legal person, it is required to provide full names and addresses for delivery of members of the body authorized to represent that legal person.

Details about shareholders

The shareholders of the Limited Liability Company can be natural persons, as well as companies. A Limited Liability Company cannot be formed solely by another single-shareholder Limited Liability Company. The shareholders are not liable for the obligations of the company.

Management board

The management board manages the affairs of the company and represents the company. The management board is composed of one or more members. Members of the management board are appointed and dismissed by a resolution of the shareholders, unless the articles of association provide otherwise. If the management board comprises several members, the rules for representation should be stipulated in the articles of association. If the articles of association do not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a commercial proxy.

Supervisory board

The articles of association may create a supervisory board or an audit committee or both. In companies where share capital exceeds PLN 500,000 and where there are more than twenty-five shareholders, the establishment of supervisory board or audit committee is mandatory. The supervisory board (or audit committee) consists of at least three members appointed and dismissed by a resolution of the shareholders. The articles of association may provide a different method of appointment and dismissal of members of the supervisory board. The supervisory board exercises permanent supervision over all areas of the activities of the company. However, the supervisory board does not have the right to give the management board any binding instructions with respect to the management of the affairs of the company. But, last year’s amendment to the Code of Commercial Companies strengthens the position of supervisory boards by granting them the power to request management bodies to prepare or provide any information, documents, reports, or explanations concerning the company. Whereas the acquisition of new information by the supervisory board from the management boards of companies, will result in the imposition of new obligations on it with regard to the analysis of this information.

Minimum capital, minimum contribution

The minimum amount of share capital in Joint-Stock Company is PLN 100,000. The share capital shall be divided into shares of equal nominal value. Nominal value of the share may not be lower than PLN 0.01.

The shares subscribed for in-kind contributions shall be paid in full not later than within a year from the date of registration of the company.

The shares subscribed for cash contributions shall be paid prior to registration of the company to the extent of at least one fourth of their nominal value.

If the shares are subscribed solely for in-kind contributions or for in-kind contributions and cash contributions, the share capital shall be paid in prior to registration to the extent of at least one fourth of its amount.

Business name

Minimum documentation

Establishment of a Joint-Stock Company also requires the consent to the formation of the Joint-Stock Company and the wording of the statutes, as well as to the subscription for the shares. The consents should be adopted in a form of one or more notarial deeds.

Also, the motion to National Court Register must be prepared. Following documents should be attached to the motion:

• Statute
• Notarial deeds on the formation of the company and subscription for the shares
• Statement of all members of the management board that the payments towards the shares and the in-kind contributions required under the statute have been legally made
• Confirmation, certified by a bank or an investment company, of payment for the shares made to the account of the company in organization or, in the event of coverage of share capital by in-kind contributions after the registration, the statement of all board members that payments of the contributions within statutory period is ensured by the statute
• Document confirming that the governing bodies were formed with details about members of the bodies
• The board members’ statements concerning their addresses for delivery and consent for appointment on the position of a board member
• The document concerning full names and addresses for delivery or company’s name, or name and registered office of the members of the bodies or persons authorized to appoint the management board; if the shareholder is a legal person, it is required to provide full names and addresses for delivery of members of the body authorized to represent that legal person.

Details about shareholders

The shareholders of the Joint-Stock Company can be natural persons, as well as companies. A Joint-Stock Company may not be formed exclusively by a single-shareholder Limited Liability Company. The shareholders are not liable for the obligations of the company. The shareholders are not liable for the obligations of the company.

There are two kinds of shares: registered shares and bearer shares. The registered shares indicate the shareholder. The registered shares certificate can be issued before making a full payment. The statute can state that the sale of registered shares requires a consent of the company or limits such sale in a different way. The bearer share does not indicate entitled party, which is the holder of the share certificate. Such share cannot be issued before the full payment. Sale of the bearer shares cannot be limited. The change of the ownership of the bearer share requires handing over the share certificate.

Upon the request of shareholder, registered shares can be changed to bearer shares (or vice versa), unless the law or the statute provide otherwise.

Management board

The management board manages the affairs of the company and represents the company. The management board is composed of one or more members. Members of the management board are appointed and dismissed by the supervisory board unless the statute provides otherwise. The board member can be dismissed or suspended also by the general meeting of the shareholders. The board members can be appointed for maximum 5 years term of office.

If the management board comprises several members, the rules for representation should be stipulated in the statute. If the statute does not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a commercial proxy.

Supervisory board

Establishment of a supervisory board in the Joint-Stock Company is mandatory. The supervisory board exercises permanent supervision over all areas of the activities of the company.

The supervisory board consists of at least three members (five in case of public companies) appointed and dismissed by the general meeting of shareholders. The statute may provide a different method of appointment and dismissal of members of the supervisory board. Members of the supervisory board can be appointed for maximum 5 years term of office.

The amendment to the Code of Commercial Companies strengthens the position of supervisory boards by granting them the power to request management bodies to prepare or provide any information, documents, reports, or explanations regarding the company. However, the supervisory board’s acquisition of new information from the management boards of companies imposes new obligations on it in terms of analysing this information.

Minimum capital, minimum contribution

The minimum amount of share capital in Simple Joint-Stock Company is PLN 1. The shares have no nominal value, do not constitute part of the share capital and are indivisible.

The amount of the share capital is not specified in the articles of association. The provisions on amendments to the articles of association do not apply to changes in the amount of share capital.

The contributions shall be paid in full within three years from the company’s entry in the register.

Business name

Minimum documentation

Establishment of a Simple Joint-Stock Company also requires the establishment of company bodies required by the law or the articles of association and making contributions by shareholders to cover the share capital.

Also, the motion to National Court Register must be prepared. Following documents should be attached to the motion:

• Articles of association
• A declaration of all members of the management board on the amount of the share capital
• Declaration by all members of the management board that the contributions to cover the shares were made in the part provided for in the articles of association
• If the appointment of members of the company’s governing bodies does not constitute a notarial deed containing the articles of association – proof of their appointment, specifying their personal composition
• A list of shareholders signed by all members of the management board, giving the surname and first name or company (name) as well as the number and series of shares taken up by each of them
• The board members’ statements concerning their addresses for delivery and consent for appointment on the position of a board member
• The document concerning full names and addresses for delivery or company’s name, or name and registered office of the members of the bodies or persons authorized to appoint the management board; if the shareholder is a legal person, it is required to provide full names and addresses for delivery of members of the body authorized to represent that legal person.

Details about shareholders

The shareholders of the Simple Joint-Stock Company can be natural persons, as well as companies. A Simple Joint-Stock Company may not be formed exclusively by a single-shareholder Limited Liability Company. The shareholders are not liable for the obligations of the company. Shareholders are only obligated to perform the services specified in the articles of association.

Shares are not in the form of a document, and they are registered in the register of shareholders.

Management board

It is mandatory to establish a management board or board of directors.

The management board manages the affairs of the company and represents the company. The management board is composed of one or more members. Members of the management board are appointed and dismissed by the shareholders, unless the article of associations provide otherwise.

If a supervisory board has been established in the company, the members of the management board shall be appointed, dismissed, and suspended for important reasons by the supervisory board, unless the articles of association provide otherwise.

If the management board comprises several members, the rules for representation should be stipulated in the articles of association. If the articled of association do not include any provisions in this respect, representations in the name of the company may be made by two members of the management board acting jointly or by one member of the management board acting together with a commercial proxy.

Board of Directors

The board of directors manages the company’s affairs, represents the company, and supervises the conduct of the company’s affairs. It is composed of one or more directors.

Directors are appointed, dismissed and suspended by shareholders for important reasons by a resolution, unless the articles of association provide otherwise.

The articles of association, the rules of the board of directors or a resolution of the board of directors may delegate some or all the activities of the company’s business to one director or some directors (executive directors). Directors who are not executive directors (non-executive directors) exercise permanent supervision over the conduct of the company’s affairs.

If the board of directors comprises several directors, and the articles of association do not contain any provisions on this matter, two directors or one director together with a commercial proxy are required to make statements on behalf of the company.

Supervisory board

Establishment of a supervisory board in the Simple Joint-Stock Company is not mandatory. However, the articles of association may provide that, in addition to establishing a management board, the company must also establish a supervisory board. The supervisory board exercises permanent supervision over all areas of the activities of the company.

The supervisory board consists of at least three members appointed and dismissed by a resolution of shareholders. The articles of association may provide a different method of appointment and dismissal of members of the supervisory board.

The mandate of a body member shall expire on the date of the general meeting approving the financial statements for the first full financial year following the date of appointment, unless the articles of association provide otherwise for an indefinite period.

If the articles of association provide the appointment of a member of the body for a term of office, it shall be counted in financial years, unless the articles of association provide otherwise. In such a case, the mandate of the body member shall expire on the date of the general meeting approving the financial statements for the last year of the body member’s term of office, unless the articles of association provide otherwise.

The amendment to the Code of Commercial Companies grants the supervisory board the power to request management bodies to prepare or provide any information, documents, reports, or explanations regarding the company. However, the supervisory board’s acquisition of new information from the management boards of companies imposes new obligations on it in terms of analyzing this information.

Two ways of online registration

Currently, an application for company registration can be submitted in the National Court Register online only. It is not possible to submit a paper application. However, there are two methods of applying for registration with the National Court Register:

• Via the S24 system – in the case of companies whose articles of association has been concluded in this system
• Via the Court Registers Portal – in the case of companies whose articles of association has been concluded in a traditional form.

Types of companies that can be set up online (S24)

Registration of a company via Internet, in the S24 system, is a good form for the companies established by one person or those that have only standard provisions in their articles of association.

In the S24 system, it is possible to conclude an agreement and register:

Registration process

The main condition for establishing a company in the S24 system is that all persons signing the articles of association and participating in its registration should have a qualified electronic signature, a trusted signature (ePUAP) or an electronic personal signature.

It is possible to use S24 portal after creating an account. To log in, it is necessary to provide login and password. Each person who will sign the registration application (each of the management board members

listed in the articles of association that is not suspended, or theirs representative), and shareholders or their representatives should have an account.

The system will notify which documents are needed and will guide through all stages of their preparation. S24 provides most of the model documents, but not all of them, for example, a declaration of the status of a foreigner should be prepared independently.

After correctly completing the previous steps, the S24 system will automatically transfer applicant to the electronic payment system.

After payment, the application will be sent to the registry court competent for the company’s seat. The court should verify an application within one day from the date of receipt. However, the verification time may be extended if the court asks for additional documents, e.g., if the shareholder is a foreign company (then a translated excerpt from the foreign company’s register along with an apostille may be required).

Advantages and disadvantages of registering a company via S24

Advantages:

• All formalities related to the establishment and registration of companies may be done online
• There is no obligation to visit a notary public, as opposed to setting up a company in a traditional way
• The court fee is lower. Instead of PLN 600, it is PLN 350.

Disadvantages:

• Fewer possibilities of adjusting the articles of association than in the case of using the services of a notary public
• No possibility to modify the financial year
• Share capital may be covered only with cash contributions.

Additional notifications

In addition to the registration of the company in the National Court Register, the following data should also be reported:

• Supplementary information for the tax office, for example bank account numbers, information on the special status of companies, expected number of employees or place of business and detailed contact details, within:
  • 21 days from the date of entry of the company into the National Court Register
  • 7 days from the date of commencement of business activity – if it is planned to pay social security contributions.
• Ultimate beneficial owner to the Central Register of Real Beneficiaries (CRBR),
  • the application should be made within 7 days from the date of entry into the National Court Register
  • the application must be signed with e-PUAP or qualified electronic signature by
    the board members/proxies according to company representation rules
  • the application must be submitted electronically – can be done by PoA.

Purpose

Foreign entrepreneurs can conduct business activity on the territory of Poland trough a branch. A branch can only conduct such activity which coincides with the scope of business activity of foreign entrepreneur. According to Polish law, the branch is considered a part of mother company, not an independent entity. However, the branch may hire employees on its own behalf.

Business name

To the business name should be added the form of business of the mother company translated into Polish (e.g., LTD = spółka z ograniczoną odpowiedzialnością) and the term “oddział w Polsce” (in English: branch in Poland).

Minimum documentation

The branch can start conducting business activity after the registration in the National Court Register. The following documents should be attached to the registry motion:

• Articles of association, statute, or other document on basis which the foreign entrepreneur conducts the activity
• Excerpt for the register of foreign entrepreneur
• Document stating name and address of the person entitled to represent foreign entrepreneur in branch.

Additional notifications

In addition to the registration of the company in the National Court Register, additional data must be submitted to the tax office, such as bank account numbers, information on the special status of companies, the expected number of employees or place of business, and detailed contact details. Applications must be made within the:

• 21 days from the date of entry of the foreign entrepreneur’s branch into the National Court Register
• 7 days from the date of commencement of business activity – if you intend to pay social security contributions.

Purpose

Registration

Natural persons who conduct business activity are registered in the Central Registration and Information on Business (CEiDG). The entrepreneur can register in CEiDG, tax office and social insurance institution (ZUS) with a single application. Such application can be submitted electronically by CEiDG website, sent by post to a selected municipal office or filed in person in selected municipal office.

Documentation

Together with the application, the entrepreneur shall provide a statement that he owns legal title to the real estates, with addresses already entered into the register (i.e., correspondence address and all addresses of conducting business, including main address of business and addresses of branches – if there are such). The legal title can be for example a property sales agreement or a lease agreement.

Such legal title is not attached to the registry motion, but the ministry responsible for economic affairs may request the entrepreneur to provide it within 7 days from receiving the request. If the entrepreneur will not provide it or changes the addresses in the register, the ministry can decide on erasing the entrepreneur from the register.

Incorporation time

Fees

Special Economic Zones

Certain territory of Poland is considered as a Special Economic Zone, however, the intensity of public aid is different and depends on the region. General rule is that depending on the volume of investment, number of employees and additional local requirements, the taxpayer may benefit from tax exemption. Conditions are established for each taxpayer by a special agency responsible for Special Economic Zone which after application procedure issues a decision granting exemption in the particular case.

Research and Development (R&D)

Polish CIT act provides for special taxation regime encouraging investments into new technologies. Main tool is special Research and Development (R&D) relief based on which taxpayer can additionally deduct expenses on R&D, including development of prototypes and pilot projects, demonstration, testing, and validation of new or improved products, processes or services whose main purpose is to improve the technical encoding products.

Polish Investment Sphere is a kind of tax relief for new investment based on the decision on support in Polish Investment Sphere (dedicated for industrial sector and sector of innovative services).

Another tax benefit dedicated to the investor is so called IP Box. Based on the IP Box provisions, income derived from intellectual property can be preferentially taxed with 5% tax rate.

Remaining preferences in the CIT Act are i.a.:

There are also other tax benefits for various economic sectors and legal forms.

Acquisition of real estates by foreigners

Acquisition of real estate in Poland by foreigners is regulated by the Act on Acquisition of Real Estate by Foreigners dated March 24^th, 1920 (Official Journal from 2017, position 2278).

According to this Act the foreigner is:

• natural person not having Polish citizenship;
• legal person having its seat abroad;
• company without legal personality having its seat abroad, established by persons referred in point 1 and 2 in compliance with statutory law of foreign state;
• legal person (or company without legal personality) having its seat in Poland, which is directly or indirectly controlled by persons indicated above.

Under the Act acquisition of perpetual usufruct requires fulfilment of the same conditions as acquisition of ownership.

The acquisition of real estate by a foreigner requires a permit. The permit is issued by the Minister of Internal Affairs. The Minister of National Defence or the minister competent for rural development (in case of agricultural parcels) have a right to oppose such acquisition.

The permit is issued upon the foreigner’s request if:

Permit is also required in case of acquisition of shares in a company with its seat in Poland by foreigners, as well as any other legal action concerning shares of the company, if:

• in the result of such action the company which is an owner or a perpetual usufructuary of real estate in Poland will become a controlled company or
• if the company which shares are acquired is a controlled company and the shares are acquired by a foreigner who is not a shareholder of this company.

Acquisition of a real estate which violates the provisions of the Act on Acquisition of Real Estate by Foreigners is null and void.

Most of the limitations do not apply to residents of member states of European Union, European Economic Area and Swiss Confederation.

Acquisition of agricultural parcels

In general acquisition of agricultural parcel is reserved for so-called “individual farmers”.

Individual farmer is a term introduced by the Act on Shaping the Agricultural System dated April 11^th, 2003 (Official Journal from 2022, position 2569) and means a natural person, who:

• is the owner, perpetual usufructuary, autonomous possessor or tenant of agricultural land of total utilised agricultural area not exceeding 300 hectares,
• possess agricultural qualifications (i.e. is educated in agriculture or has appropriate work experience in agriculture),
• is residing in the municipality, on the territory of which the agricultural parcels are located for at least 5 years;
• personally runs the farm for all the time stated above.

The acquisition of the agricultural parcels by persons who are not individual farmers is possible in particular in the following cases:

• the purchaser is close relative of the vendor (which means descendants, ascendants, siblings, sibling’s children, siblings of parents, spouse, parents-in-law, adopters and adopted individuals, stepchildren, stepparents, and stepchildren)
• the purchaser is a commercial company:
  • of which the sole shareholder or shareholder is the State Treasury, being the operator of the transmission system or holding a concession for the transmission of liquid fuels, within the meaning of the Act of April 10, 1997 – Energy Law
  • which is the operator of the gas distribution system within the meaning of the Act of April 10, 1997 – Energy Law, in the case of acquiring agricultural real estate for purposes related to the construction, modernization, or expansion of the gas distribution system
• a capital company or capital group, as referred to in Article 1(1) of the Act of March 18, 2010, on special powers of the minister responsible for state assets and their exercise in certain capital companies or capital groups operating in the sectors of electric energy, crude oil, and gaseous fuels (Journal of Laws of 2020, item 2173), is entitled to acquire agricultural real estate for purposes related to the construction, modernization, or expansion of the infrastructure in the sectors of electric energy, crude oil, and gaseous fuels
• the purchaser is an entity of local self-government or the State Treasury
• the purchaser is a church or religious association
• the purchaser is a national park – in case if the acquisition of agricultural parcel is associated with nature conservation
• the purchaser is agricultural production cooperative
• the entity that has sold agricultural real estate for purposes related to the construction of a marine wind farm within the meaning of Article 3(3) of the Act of December 17, 2020, on promoting the generation of electric energy in marine wind along with a set of devices for power extraction within the meaning of Article 3(13) of this Act, or has been expropriated for purposes specified in this Act – if acquiring agricultural real estate with an area not exceeding 150% of the area of the sold agricultural real estate within 3 years from the date of the sales agreement or within 3 years from the date when the decision on expropriation of the agricultural real estate became final
• the purchaser is a person who has sold agricultural real estate for purposes related to the implementation of an investment in the construction of a nuclear power facility or an associated investment within the meaning of the provisions of the Act of June 29, 2011, on the preparation and implementation of investments in the field of nuclear power facilities and associated investments, or has been expropriated for purposes specified in this Act – if acquiring agricultural real estate with an area not exceeding 150% of the area of the sold agricultural real estate within 3 years from the date of the sales agreement or within 3 years from the date when the decision on expropriation of the agricultural real estate became final
• the purchaser is Investor as referred to in Article 3a(2) of the Act of June 29, 2011, on the preparation and implementation of investments in the field of nuclear power facilities and associated investments
• agricultural real estate has an area smaller than 1 hectare
• inheritance of a real estate
• acquisition of a real estate on basis of article 151 and article 231 of Civil Code
• acquisition of a real estate in the course of restructuring proceeding
• during enforcement and bankruptcy proceedings
• as a result of abolishing co-ownership, division of marital property after the termination of marriage, and estate distribution;
  • as a result of the division or merger of commercial companies
  • as a result of the transformation of an entrepreneur or civil partnership into a commercial company based on the provisions of the Act of September 15, 2000 – Commercial Companies Code.

The acquisition of agricultural real estate by entities other than those mentioned above may also occur with the consent of the Director-General of the National Center, expressed through an administrative decision issued upon request, but only in specific cases defined by regulations.

Obligations of a purchaser of agricultural parcels

The purchaser of the agricultural parcel is obliged to run the farm, which was a part of acquired agricultural parcel for at least 10 years from the date of acquisition. If the purchaser is a natural person – he/she is obliged to fulfil this requirement personally.

During this 10-year period the acquired agricultural parcel cannot be sold or given into the possession of other person.

Priority right

The tenant of agricultural parcel, who fulfils requirements specified in the Act on Shaping the Agricultural System, has a priority in purchasing it. If there is no tenant entitled to priority right or if he/she does not exercise this right, the priority in purchasing the agricultural parcel is passed to the State Treasury.

The above rules do not apply if:

• the purchaser is a person close to the vendor, an entity of local self-government or the State Treasury;
• relevant authorities granted a purchaser a permission to acquire the agricultural parcel;
• the sale is concluded between legal entities of the same church or religious association.

Income and capital gains

Corporate income tax is levied at a rate of 19% (standard rate) or 9% (reduced rate for small taxpayers and new companies in the first year of business activity).

Withholding tax on cross border payments

The term “withholding tax” is used to describe income tax (both corporate and personal) withheld by remitters whose permanent establishment (place of residence, seat, or the so-called foreign establishment) is in the country in which the income arises.

20% is the withholding tax rate, is levied on income from interest, copyright or related rights, rights to inventive designs, trademarks and decorative designs, disclosing the secret of a recipe or production process, for the use or right to use an industrial device. The taxation may be diminished by application EU Directives or double taxation treaties.

19% is the withholding tax rate that covers payment of dividends, also in this case tax burden may be diminished by application of EU Directives or double taxation treaties.

From 2022, a ‘pay and refund’ mechanism (including withholding tax at standard rates of 19%/20%) has been introduced in relation to certain categories of payments to related parties exceeding PLN 2 million.

Corporate income tax – general information

Residence

Taxable income

Resident companies are taxable on their worldwide income, including capital gains. The taxable income is computed on the basis of the accounting profits and is adjusted for several items as described in the tax law. Revenues are divided into two sources – business activity and capital gains.

Tax period

Standard tax year is 12 months, it can be similar to calendar year but also may be changed. Tax advances are paid throughout the year on a monthly or quarterly basis and reconciliated annually.

Tax returns and assessment

The taxpayer has to calculate and report revenues, tax deductible costs and tax due in the annual tax return (self-assessment). The deadline for filing the return is by the end of the third month following the end of the tax year. The filing deadline cannot be extended.

Tax advancement

Tax advances should be calculated and paid by the taxpayer on a monthly basis, quarterly in the first year, or if gross sales did not exceed EUR 2,000,000 in the previous year. Basis for calculation are current taxable revenues and tax-deductible costs, the taxpayer can choose to estimate the tax on the basis of tax year preceding the previous year (current year – 2).

Deductions

Generally, expenses incurred in connection to obtaining, ensuring and maintaining taxable income are fully deductible, unless they are listed as non-deductible items. Some items are deductible only up to a limit set by the law.

Carry forward of losses

Tax losses may be carried forward up to 5 tax years. During each year the company cannot utilize more than 50% of the loss. Loss from one source (business activity/capital gains) must be utilized within the same source. It is also possible to reduce the loss by an amount not exceeding PLN 5,000,000 at a time, the amount not deducted being settled in the remaining years of the five-year period, provided that the amount of the reduction in any of those years may not exceed 50% of the amount of the loss.

Dividend payments

Dividends paid out of profits are taxed at 19% rate. However, exemptions from the EU Parent-Subsidiary Directive apply.

Minimum tax

Starting from 2024, the minimum tax comes into effect.

The minimum tax will be paid by companies, tax capital groups and permanent establishments of foreign entrepreneurs, which in the tax year:

• Incur a loss from a source of income other than from capital gains, or
• Have a share of income from a source income other than from capital gains, of not more than 2%.

The tax rate is 10% and the tax base is the sum of:

• 1.5% of the value of the company’s income other than from capital gains
• costs of debt financing exceeding the value of 30% of the so-called EBITDA
• costs of intangible services and royalties.

With the alternative method, the rate is 3%. With this method, the tax base is the sum of income from the source of income other than capital gains earned by the taxpayer in the tax year.

Incentives

Special Economic Zones

Whole territory of Poland is considered as a Special Economic Zone, however, depending on the region intensity of public aid is different. General rule is that depending on the volume of investment, number of employees and additional local requirements, the taxpayer may benefit from tax exemption. Conditions are established for each taxpayer by a special agency responsible for Special Economic Zone which after application procedure issues a decision granting exemption in the particular case.

Research and Development (R&D)

Polish CIT act provides for special taxation regime encouraging investments into new technologies. Main tool is special R&D relief based on which taxpayer can additionally deduct expenses on Research and Development (R&D), including development of prototypes and pilot projects, demonstration, testing and validation of new or improved products, processes or services whose main purpose is to improve the technical Encoding Products.

The relief is available to all entrepreneurs engaged in R&D activities and allows for a deduction from the taxable base:

• 200% of personnel costs (for employees involved in research and development projects)
• 100% of other qualified costs.

Another tax benefit dedicated to the investor is so called IP BOX, according to this regulation income derived from intellectual property can be preferentially taxed with 5% tax rate.

There are also other tax benefits introduced for different economic sectors and various legal forms.

International aspects

Resident companies

Foreign income and capital gains

Resident companies are subject to tax on their worldwide income and capital gains. Taxable amount is generally calculated in the same way as in the case of domestic income.

Foreign losses – losses of foreign permanent establishment (calculated based on Polish tax rules) may be offset against domestic profits unless, on the basis of an applicable double tax treaty, the exemption method applies for double tax relief.

Dividend income paid by non-resident company

Dividends paid out of profits are taxed at tax rate of 19% unless rule implementing EU Parent-Subsidiary Directive applies.

Double taxation relief

No unilateral double taxation relief is provided. Double taxation is relieved only on the basis of tax treaties.

Non-resident companies

Taxable income

Non-resident companies are taxed only on income derived from Polish sources. They are generally taxed according to the rules applicable to residents. Income attributable to a Polish permanent establishment is generally taxed at 19% rate through a tax return (self-assessment).

Withholding tax

Generally, 19% withholding tax or tax security is levied (unless limited under a tax treaty). For interest and royalty payments EU Interest and Royalties Directive was implemented.

Dividend paid by resident companies to non-resident

Dividends paid out of profits are (unless rules implementing EU Parent-Subsidiary Directive apply) subject to a 19% final withholding tax, unless a reduced rate applies under a tax treaty.

Anti-avoidance rules

Thin capitalization

Taxpayers are required to exclude from their deductible expenses the cost of debt financing to the extent that the excess cost of debt financing exceeds either PLN 3 million or 30% of annual so-called EBITDA indicator. For its determination, an algorithm has been established:

[(P – Po) – (K – Am – Kfd)] × 30%, where:

P – summed up value of revenues from all sources subject to CIT;

Po – revenues of interest nature;

K – sum of tax-deductible costs without taking into account deductions to which one is entitled;

Am – depreciation write-offs included in the tax year to the tax deductible costs;

Kfd – debt financing costs included in the tax year to the tax deductible costs not included in the initial value of fixed assets and intangible assets, before taking into account deductions to which one is entitled.

Controlled foreign company

Companies having seat in tax haven, or in a country with no exchange of information, are treated as controlled foreign company.

The regulation refers also to companies established abroad deriving at least 33% of passive revenues like dividends, interests, copyrights, etc. In 2022, there was an expansion of the passive revenue catalogue to include intangible services provided, such as consulting, accounting, market research, legal, advertising, management and control, data processing, employee recruitment and acquisition services, and benefits of a similar nature.

Part of CFC income attributable to Polish parent is taxable in Poland. Under certain conditions foreign company may be excluded from CFC rules.

Tax avoidance clause

From 2016 every artificial action consisting in the performance of an act primarily in order to achieve a tax advantage is defined as tax avoidance.

In case of tax avoidance, authorities may reclassify given transaction or action and establish new tax consequences. Penal consequences may be applied to the person involved in the tax avoidance.

Real estate companies

A real estate company is a company having 50 % asset‘s value consisting of real estate located on the territory of the Republic of Poland and the value of such real estate exceeded PLN 10 mil.

Real estate companies are obliged:

• to submit information on their direct and indirect shareholders
• to act as an income taxpayer in case the seller of shares in this company is a non-resident and the subject of the sale are shares or stocks giving at least 5 % of votes in the company
• to appoint a tax representative when the company is not a tax resident in the EU or in another state belonging to the European Economic Area. 

Real estate companies can only recognize depreciation up to the limit set for accounting purposes.  Depreciation and amortization payments made on buildings and dwellings are excluded from tax expenses.

Report on the implementation of the tax strategy

Tax capital groups and taxpayers whose revenues exceed EUR 50 mil are obliged to prepare and publish on their website information on the tax strategy implemented for the previous tax year. This obligation must be fulfilled by the end of the twelfth month following the end of the tax year.

Limited partnership

Since January 1^st, 2021, limited partnerships have lost their status of tax transparent companies and will obtain the status of CIT taxpayer. In practice, this change is tax-neutral for general partners, while
the income due to limited partners will be double taxed.

Transfer pricing

At the turn of 2022, Polish transfer pricing regulations were significantly revised. Positive aspects of these changes include some simplifications for businesses, as well as the elimination of the statement on the preparation of transfer pricing documentation as a separate document. There has also been a change in the regulations on transactions with tax havens, in particular, the repeal of the regulations on indirect haven transactions and an increase in the documentation thresholds for direct haven transactions. Transfer pricing documentation requirements generally follow the recommendations of the OECD Transfer Pricing Guidelines and the EU Code of Conduct on Transfer Pricing Documentation. In some cases, country-by-country reporting is used.

You can find more information about Transfer Pricing in our eBook: Transfer Pricing Overview for Poland

Optional settlement methods

Estonian CIT

From 2021, a new system of taxation of capital companies was introduced into the Polish legal system, the so-called ‘Estonian CIT’. Estonian CIT system enables changing the moment of tax payment. Currently, entities pay CIT on the income earned in a given tax year. In the Estonian CIT model, the tax will be paid only when the income is distributed, e.g., in the form of a dividend.

The law is addressed to capital companies that meet the following criteria:

• The scheme can be used by joint-stock companies, simple joint-stock companies, limited liability companies, limited partnerships, and joint-stock partnerships.
• The shareholders are exclusively natural persons.
• The company has no shares in other entities.
• The company employs, apart from the shareholders, at least three employees on the basis of an employment contract (or incurs monthly salary expenditures in the amount of at least three times the average monthly salary).
• Passive income does not exceed 50% operating income of all company revenues obtained from its activities in the previous tax year, calculated including the amount of VAT due.

The lump sum on income is paid of the payment 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.

Small taxpayers

A small taxpayer is a taxpayer whose sales revenue (including the amount of VAT due) did not exceed EUR 2 mil in the previous tax year. Small taxpayers are entitled to preferential treatment of quarterly tax settlement, the right to apply 9% tax rate and one-off depreciation of certain fixed assets.

Tax investment fund

Taxpayers meeting the same conditions as in the Estonian CIT are entitled to create and make deductions to a special investment fund account. The made deduction may be recognized as a tax-deductible cost.

The condition for the deduction to be recognized as a tax-deductible cost is to make an investment expenditure. In practice, this solution enables immediate depreciation of fixed assets.

Holding Company

The purpose of introducing the institution of a holding company in the CIT Law is to encourage investors. The main condition for the use of this legal form will be that the holding company holds at least 10% of the shares in the subsidiary for a minimum of 2 year. The holding company should perform actual activities constituting business activity, including:

• to have staff, premises, and equipment to conduct this activity,
• function based on economic premises,
• show proportionality between the conducted activity and the resources possessed,
• enter into contracts and agreements that are economically feasible, economically justified and not manifestly contrary to the general economic interest of the entity.

The institution provides for tax preferences, such as a tax-free sale of shares and an exemption for 100% of dividends received.

Taxes on capital

Transaction Tax (PCC)

Certain civil law transactions are subject to this tax, among others:

• sale of things or rights
• exchange of things or rights
• loan
• mortgage
• Articles of Association.

The tax refers to non-professional transactions, when a transaction falls under VAT the tax does not apply.

Typically, the tax is levied as percentage of the value of transaction, e.g. sale of real property or loan are taxed at 2%.

Real estate tax

This tax is levied on land, buildings, apartment and constructions related to business activity. In case of business-related estates, the rates are higher. The maximum rate of the business land tax is PLN 1,38 per m2, whereas in a private case it’s PLN 0.73 per m2. In case of buildings, business related space is subject to the rate of PLN 34,00 per m2. Apartment space is taxed at PLN 1,19 per m2. Structures are taxed at 2% of their value.

Municipalities may decrease these rates in accordance with local resolutions.

In 2025, changes in real estate tax came into effect. The definitions of “building” and “structure” have been changed, which may impact the classification of certain objects and, consequently, the applicable tax rate.

Exit tax

The introduction of the exit tax into the Polish tax system, starting in 2019, is due to the obligation to implement Directive (EU) 2016/1164, adopted in 2016. An important premise of the exit tax is the taxation of unrealized gains in connection with the transfer of one’s assets to another country. Tax will also be due in the event of a change in the taxpayer’s residency status, which deprives Poland of taxation on income that arises in connection with the disposal of an individual’s assets.

The general idea behind the introduction of exit tax was to cover only assets with a value exceeding PLN 4 million. This applies in the case of transferring assets abroad.

The rate of exit tax is equal to 19% and 3%.

The change in the PIT is the extension of the exit tax deadline to:

• the seventh day of the month following the month in which the taxpayer lost all or part of
  the assets subject to this tax, if the loss of all or part of the assets occurred before
• December 1, 2025, and
• December 31, 2025 in other cases.

Other business-related taxes

Motor vehicle tax

Excise duties

Customs duties

Sugar tax