Tax Essentials

Understanding key tax concepts is crucial to running a prosperous business. Here is an overview of what you need to know about taxes when founding a startup in Poland.

Poland has advantageous tax solutions, which encourage people to conduct business activities in our country. Legal regulations are to support both Polish and foreign investors. Below is a brief overview of the most important information on tax solutions prepared for entrepreneurs setting up business in Poland.

Corporate Income Tax (CIT)

19%

– standard tax rate on income drived by the capital companies (limited liability company and joint-stock company) and
the limited joint-stock partnerships

– reduced rate for small taxpayers, whose gross income did not exceed EUR 2M in a preceding tax year or taxpayers who just start a business
– 9% tax rate may be applied to the amount of gross income not exceeding EUR 2M in a tax year. The reduced rate does not apply to taxation of capital income, dividends, or income from controlled foreign company (CFC)

– income derived on intellectual property which was created, developed, or upgraded by a taxpayer within its R&D activity (so-called Innovation Box)

Personal Income Tax (PIT)

PIT rates

– for the individuals until the age of 26 for the income up to PLN 85,528 (does not apply to self-employed individuals)

17%

– for the income up to PLN 120.000

19%

– business activity (self-employed) – after submitting the declaration on the linear taxation

32%

– for the income over PLN 120.000

PIT exemptions

return of business trip costs, like per diem, travel and accommodation expenditure
the value of some benefits paid by an employer due to the accommodation of employees
expenses incurred by an employer for education and enhancement of qualifications of his employees

Value Added Tax (VAT)

VAT rates

23%

– standard rate

Reduced VAT

5% or 8%

– delivery of some goods and provision of certain services as specified in the Polish VAT Act (case by case check is required). For example, the 5% rate covers basic food items like bread and dairy.

– export of goods

– intra-community delivery of goods

– international transport

VAT exemptions

delivery of certain goods and provision of certain services as specified in the Polish VAT Act (case by case check is required). For example, health care services provided by a physician or dentist.

Real Estate Tax

Subject to the Real Estate in Poland

Lands;
Buildings or parts thereof;
Structures other than buildings associated with conducting an economic activity.

The real estate tax rates are established individually by each Municipality and may vary for depending on the location of the investment sites. The national law sets the maximum rate for real estate tax rates. For example in Wroclaw, the real estate tax in 2022 are as follows:

Industrial/Commercial land – 1,03 PLN/ m2 annually;
Industrial/Commercial building – 25,74 PLN / m2 annually;
Structures – 2% of the initial asset value annually.

Withholding Tax

20%

non-residents’ income derived in Poland such as e.g. interest or royalties
19%

income from dividends and dividend-like instruments

The statutory withholding tax rate provided under Polish CIT Act (19%/20%) may be reduced based on a provisions of Double Tax Treaty concluded between Poland and the non-resident’s state subject to fulfillment of additional conditions. Case by case review is required to assess the applicable tax rate.

Agata Żemełko, Legal Counsel | SDZLEGAL SCHINDHELM