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Poland: guide about the taxes

Taxes - Poland

The number of business immigrants to the Republic of Poland is increasing every year. That indicates favorable economic conditions for doing business. The flexibility of the tax system becomes a determining factor in choosing a country for business.

Poland can provide a transparent and understandable system for calculating tax collections, which guarantees foreign investors honest interaction with the state and high, legitimate income.

Types of taxes

The Polish tax system includes 2 types of taxes: Immediate and Indirect. The former are paid directly to the tax authorities of the state by each of the taxpayers on an individual basis (whether it be a tax on cars, real estate, profits, etc.),

The latter are paid automatically because the cost of most goods and services already takes them into account (for example, how VAT is included in the price of products).

Basic taxes

Taxation in Poland is divided into several types:

CIT corporate income tax

The tax on the income of legal entities in Poland (CIT) is 19%. CIT applies to entrepreneurs who have a legal address or enterprises registered in the territory of Poland. 

The reporting period is selected at the discretion of the legal entity – a month or a quarter, the financial year can coincide with the calendar and last up to 18 months. The company can reduce taxes if it is involved in: 

  • charity work;
  • scientific and technical development;
  • research for the good of the country.

There are also some branches of agriculture and forestry that are tax exempt. Corporate taxes in Poland also apply to legal entities. Non-resident companies pay taxes only for sources of income located directly in Poland.

Dividend tax

Dividend tax in Poland applies to legal entities and individuals who are founders of companies. Dividends received by foreign investors are subject to 20% withholding tax, as well as payments under copyright. However, there are cases when the convention on the abolition of double taxation reduces the rate to 5-15%. Since Poland is a party to the multilateral agreement on the abolition of the double tax system, for most foreign companies, dividend taxes are at most 15%.

Personal income tax – PIT

Personal Income Tax in Poland (PIT) applies to persons who are employed and receive income in the form of wages, or who have entrepreneurial activity (private lawyer, medical practice, etc.). This law applies to residents and non-residents of the Republic of Poland. 

If your annual income is less than PLN 3091, then you do not need to pay tax.

There is a system of two stages – if your annual income is PLN 85528. and less, you pay 18% of the tax to the state budget, if your annual income exceeds the specified figure, then everything above is taxed at a rate of 32% (progressive tax).

The real estate tax

The real estate tax in Poland (real estate tax) applies to such types as land, detached building/part of a detached building, as well as buildings involved in commercial activities. The tax is set by local communities. The tax rate is estimated for one square meter and this rate cannot exceed the rates that were approved by the Ministry of Finance for the current year.

Excise duty

Excise tax in Poland is a kind of indirect tax. It is included in the price of goods and services and is paid by the consumer at the time of purchase. Excise taxes are subject to cars, tobacco products, alcohol, electricity, and energy/oil products.

VAT in Poland

VAT in Poland (value-added tax on goods and services), as mentioned above, this tax is paid by us automatically when serving in various stores and supermarkets, various medical institutions, law offices, etc. Sometimes, the cost of a product does not include VAT. It should be taken into account when calculating the final cost of a product/service. Polish VAT has several rates, which vary depending on the type of product or service:

  • 0% – export products, socially important services (banking, medical, postal), etc .;
  • 5% – certain food items, etc .;
  • 8% – passenger transfer, hotel service, medicines, etc .;
  • 23% is the base tax rate.

If you are conducting business in Poland, you must pay the amount of VAT tax. 

Polish law also provides for cases when legal entities and individuals are exempt from paying taxes or receiving tax benefits. The acquisition of a land plot, a dwelling, or its construction can significantly affect the reduction of income tax, since you, as a taxpayer, bear significant financial costs.

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