1. Corporate Income Tax (CIT)

Poland applies corporate income tax to businesses operating within its jurisdiction.

Key Points:

• Tax Rate: Poland’s standard corporate income tax rate is 19%. A reduced rate of 9% is available for small taxpayers with revenue below €2 million annually.
• Applicable Entities: The tax applies to all corporations and businesses operating in Poland, both domestic and foreign.
• Exemptions: Certain income types, such as dividends from foreign subsidiaries, may qualify for exemptions under specific conditions.

Compliance Notes: Corporate tax returns must be filed annually, typically by the end of March for entities following the calendar fiscal year.

2. Value Added Tax (VAT)

Poland imposes VAT on most goods and services.

Key Points:

• Standard VAT Rate: The standard VAT rate in Poland is 23%.
• Reduced Rates: Reduced VAT rates of 8% and 5% apply to certain goods, such as basic food products, medicines, and cultural services.
• Exemptions: Exports and intra-community supplies are VAT-exempt.

Compliance: VAT returns are typically filed monthly or quarterly, depending on the company’s turnover and preference.

3. Withholding Tax

Poland imposes withholding taxes on certain payments made to non-resident entities.

Key Points:

• Dividends: A 19% withholding tax applies to dividends paid to foreign shareholders.
• Interest and Royalties: Payments of interest and royalties are generally subject to a 20% withholding tax.
• Double Tax Treaties: Rates may be reduced under applicable double tax treaties.

Compliance: Businesses must ensure accurate withholding tax deductions and proper reporting of international payments.

4. Personal Income Tax (PIT)

Poland applies progressive personal income tax rates to individuals’ earnings.

Key Points:

• Tax Rates: The tax system has two main brackets—12% for annual income up to PLN 120,000 and 32% for income exceeding this threshold.
• Tax-Free Allowance: A tax-free allowance of up to PLN 30,000 applies to individuals.
• Deductions: Employees can claim deductions for dependents, charitable contributions, and certain professional expenses.

Compliance: Employers are responsible for withholding PIT from employee salaries monthly, and individuals file annual tax returns by April 30 of the following year.

5. Social Security Contributions

Social security contributions are mandatory for employees in Poland.

Key Points:

• Employer Contribution: Employers contribute approximately 21.5%-23.5% of an employee’s gross salary, covering pensions, disability, and accident insurance.
• Employee Contribution: Employees contribute approximately 13.71% of their gross salary.

Compliance: Contributions are remitted monthly to the Polish Social Insurance Institution (ZUS).

6. Tax Incentives and Exemptions

Poland offers various tax incentives to encourage investment and innovation.

Key Incentives:

• Research and Development (R&D) Tax Relief: Companies engaging in eligible R&D activities can claim additional tax deductions.
• Special Economic Zones (SEZs): Businesses operating in SEZs may benefit from corporate tax exemptions.

Compliance Notes: Companies must document their eligibility and apply for these incentives in advance.

7. Filing and Compliance Deadlines

Adherence to deadlines is essential to avoid penalties.

Penalties: Late submissions or underpayments may incur penalties and interest charges.

Key Takeaways

• Corporate Income Tax: Poland’s CIT rate is 19%, with a reduced rate of 9% for small taxpayers.
• VAT: The standard VAT rate is 23%, with reduced rates of 8% and 5% for selected goods and services.
• Withholding Tax: Poland charges 19% on dividends and 20% on interest and royalties, subject to treaty reductions.
• Personal Income Tax: Progressive tax rates of 12% and 32% apply, with deductions and allowances available.
• Social Security: Employers contribute up to 23.5%, while employees contribute 13.71% to social security.
• Tax Incentives: Poland offers R&D tax relief and benefits for businesses in SEZs.

Summary Table