Competitive Tax Conditions in Poland

Individuals who are resident in Poland are subject to tax on their worldwide income. Limited taxation applies to those individuals who are not resident in Poland. Individuals with the limited liability to Polish taх may be taxes solely on income received in connection with the performance of duties in Poland or from Polish sources. 

Polish companies are liable for corporate income tax on worldwide income. Non-resident companies are taxable only in income and gains arising in Poland. 

The corporate tax in Poland is one of the lowest in Europe, being rated at 19%. Partnerships are not subject to corporate income tax in Poland. 

Companies that must pay these taxes are the following:

• corporations in formation;

• tax capital groups;

• limited liability companies, joint-stock companies and other legal entities;

• organizational units without legal personality except for companies without legal personality; 

companies without legal personality with offices or management boards in another state. 

VAT in Poland.

The standard Polish VAT rate is 23% since 2011. As in many other countries, Poland also applies VAT exemptions for various services like postal and financial ones, and also reduced rates of 8% and 5% for certain food, books, newspapers and others. However, contributors have the possibility to apply for VAT refund by submitting an application to the Tax Authorities. 

Incentives for foreign investors in Poland.

Entrepreneurs that decide to invest in Poland can choose the Special Economic Zones (SEZ). These are specific areas where the Polish government has implemented programs meant to attract foreign investors and increase the region economic development. Basically SEZ represent the result of successful connections between the needs of these regions and the wishes and needs of foreign investors. Therefore, a new company with foreign capital can benefit from income tax and local taxes exemptions, employee training, and financial grants for new investments and for the creation of new jobs. The respective company must receive a permission to begin trading in an SEZ from the management board of each zone and can also receive assistance related to the investment process.

Other Taxes in Poland.

The withholding tax on interests and royalties was established at 20% unless the company can take advantage from the benefits double tax treaties signed by Poland. For branches it is not required to pay a remittance tax. For sea and air transportation services companies must pay a fax in quantum of 10%.

• 2015 CIT rate – 19%.

• Taxable profit is calculated on a cumulative monthly basis. 

• Tax year.
  Although a corporate income tax year is fixed by reference to a calendar year, taxpayers may choose an alternative financial year.

• Deductible costs.
  Deductible costs are those incurred for a purpose of earning revenue, or sustaining or securing the source of income, subject to express limitations. 

• Losses.
  Losses may be carried forward for up to 5 years. Not more than 50% may be deducted in any one year. No carry backwards is available. 

• Deprecation.Tax deprecation rates vary by type of asset. Low value additions and improvements are tax-deductible when incurred. Standard depreciation rate from 1,5% to 30%.
  Possible one-off depreciation for chosen fixed assets.

• Transfer pricing.
  Generally transactions with related parties are subject to specific transfer pricing rules. Transfer prices should be supported by appropriate documentations. 

• Withholding taxes-domestic.
  Dividends 19% or possible exemption. Withholding taxes-payments to foreign entities.
  Dividends 19% (except from withholding tax under Parent-Subsidiary Directive),
  Interest  20% (except from withholding tax under the EU Interest and Royalties Directive related entities only),
  Royalties  20 % (in some cases 0% e.g. when paid to government units or on bank loans).