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International Tax
Poland Highlights
In Plain English
Investment basics:
Currency – Polish Zloty (PLN)
Foreign exchange control – None (generally)
for transactions with EU, EEA, and
OECD member states and certain other
jurisdictions. Permission may be required for
some transactions with other countries and
to conduct certain transactions in a foreign
currency.
Accounting principles/financial statements
– Polish GAAP or, in some cases, IFRS.
Financial statements must be prepared
annually. Special rules apply to listed
companies.
Principal business entities – These are
the limited liability company, joint stock
company, limited joint stock partnership,
limited partnership, sole proprietorship, and
branch of a foreign corporation.
Corporate taxation:
Residence – A corporation or a limited joint
stock partnership is tax resident in Poland
if its registered seat or management is in
Poland.
Basis – Resident entities are taxed on
worldwide income; nonresident entities
are taxed only on Polish- source income.
Foreign-source income derived by residents
generally is subject to corporation tax in the
same way as Polish-source income, usually
with a foreign tax credit available, unless
a tax treaty provides otherwise. Branches
generally are taxed in the same manner as
subsidiaries.
Taxable income – Corporation tax is
imposed on a company’s profits, which
consist of two sources (i.e. “baskets”) of
income: capital gains and other income
(which includes business/trading income).
Normal business expenses (with some
limitations including interest and other
financing costs and payments for intangible
services purchased from related parties)
may be deducted in computing taxable
income.
Rate – The standard corporation income
tax rate is 19%. A lower tax rate of 9%
applicable to income other than capital
gains may be available to small taxpayers
and taxpayers commencing business
activity with revenues not exceeding PLN 1.2
million in the year (with certain exceptions).
Tax capital groups (groups of two or
more companies having a fiscal unity for
corporation tax purposes) may not benefit
from the lower rate.
Surtax – No
Alternative minimum tax – Minimum tax
applies on income from the ownership or
joint ownership of certain leased/rented
buildings located in Poland. The tax is
imposed at a rate of 0.035% per month on
the total initial tax value of the taxpayer’s
buildings, decreased by PLN 10 million. The
tax is deductible from advance corporation
income tax payments.
Taxation of dividends – Dividends received
by a Polish resident company (with certain
exceptions in the case of limited joint stock
partnerships) from another Polish, EU/EEA,
or Swiss company are exempt from taxation
if: (1) certain holding and participation
requirements are met; and (2) the dividends
are not related to a transaction (or a set of
transactions) undertaken to benefit from
a tax exemption and that does not reflect
economic reality.
If the exemption does not apply, dividends
received are taxable, but a credit for
foreign withholding tax and in some cases
underlying foreign corporate tax paid is
available, where appropriate.
Capital gains – Capital gains are taxed as a
separate source of income at the standard
corporation tax rate of 19% (see “Taxable
income,” above). An exemption may be
available for venture capital companies
(limited liability companies and limited
partnerships resident in Poland) on gains
from the transfer of shares acquired
during 2016-2023 in companies conducting
research and development (R&D) activities,
provided certain requirements are met.
Under certain conditions, some investment
funds and alternative investment vehicles
also may benefit from an exemption on the
sale of shares.
Losses – Losses from a particular source
of income may be carried forward for five
years against income from the same source,
but the deduction is restricted to 50% of
the loss incurred. Alternatively, the taxpayer
may offset up to PLN 5 million of the loss in
any one year with the remainder deductible
in the four remaining years of the five-year
period, subject to the 50% offset rule.
The carryback of losses is not permitted.
Foreign tax relief – Foreign tax paid may
be credited against Polish tax on the same
profits, but the credit is limited to the
amount of Polish tax payable on the foreign
income.
Participation exemption – See “Taxation of
dividends,” above.
Holding company regime – No
Incentives – An additional deduction ranging
from 100% to 150% of qualifying expenses
incurred for R&D activities may be available.
A one-time depreciation write-off of up to
EUR 50,000 also may be available for small
and start-up taxpayers.
A notional interest deduction of up to PLN
250,000 per year is available if certain
conditions are fulfilled. Page 2 of 11
A 5% tax rate may be applied to income
derived by a taxpayer from selected IP (e.g.
inventions, patents, medication or software)
that is created, developed or improved by
the taxpayer’s R&D activity (with certain
restrictions).
Other – A taxpayer entering into a
transaction with another person should
check that person’s name and bank account
against the “white list,” a register of all
active VAT payers and their bank accounts
that is publicly available on a government
website (see “Value added tax” below).
If the person or the bank account is not
included on the white list, payments to the
bank account will not be tax deductible for
income tax purposes.
Compliance for corporations:
Tax year – Taxpayers may choose the
calendar year or another 12-month
period. Consolidated returns – Companies
may form a tax consolidated group, whereby
all companies in the group are treated as
a single taxpayer for corporate income tax
purposes.
Filing and payment – Taxpayers must self-
assess and pay advance income tax during
the year and may use a simplified method
based on previous years’ results. The final
calculation and reconciliation of the tax
due must be made within three months of
the end of the tax year. Payments of tax
must be made to the taxpayer’s individual
bank account number provided by the tax
authorities.
Penalties – Statutory penalty interest
applies at a rate determined by reference to
the National Bank of Poland’s Lombard rate,
subject to a minimum rate of 8%. Persons
responsible for the tax reconciliation, as
well as members of the management board
in certain cases, are subject to penalties for
noncompliance. Corporate entities also may
be subject to penalties.
Rulings – Taxpayers may request a ruling on
the tax treatment of a specific transaction
(two or more interested parties participating
in the same transaction may submit one
request). If the background presented in
the application for a binding tax ruling
corresponds to the background covered by
a general ruling issued based on the same
legislation in force, the Ministry of Finance
may issue a decision stating that the general
ruling applies.
The legal protection resulting from a tax
ruling will not apply to tax rulings issued
before the introduction of the GAAR
(July 2016) if tax benefits resulting from
transactions/actions covered by the rulings
apply from 1 January 2017. To safeguard tax
settlements from application of the GAAR,
taxpayers may apply for a protective opinion
issued by the Head of the National Fiscal
Administration (the deadline for issuing
the opinion is six months and the fee for
submitting the application for the opinion is
PLN 20,000).
Individual taxation:
Residence – An individual is resident if his/
her center of personal or economic interest
is in Poland or if he/she stays in Poland for
more than 183 days in the tax year (these
rules may be modified under certain tax
treaties).
Basis – Residents are taxed on their
worldwide income. Nonresidents are taxed
only on Polish-source income.
Taxable income – Taxable income includes
most cash and noncash benefits earned
from employment or income from self-
employment. Profits derived from business
activities are subject to rules similar to the
rules for companies.
Rates – In general, progressive rates of
17%-32% apply, although certain individuals
(e.g. those carrying out business activities)
may opt for a flat rate under the “lump
sum” regime or a flat 19% tax rate (with the
deduction of normal business expenses
subject to some limitations, but without
relief for most other deductions and
allowances or the option for joint spousal
or single parent filing). Taxpayers may apply
a preferential 5% tax rate to selected IP, as
can corporations. Rental income (earned
outside the scope of individual business
activity) is subject to tax at progressive
rates (17%-32%) or a flat rate of 8.5% or
12.5% under the lump sum regime.
Individuals whose annual income from
specific sources (including, for example,
income taxed at progressive rates, income
from the sale of shares/securities and
income from business activity taxed at
a linear rate) exceeds PLN 1 million are
subject to an additional 4% solidarity
surcharge on the portion of income in
excess of PLN 1 million.
Where an individual moves assets outside of
Poland or loses Polish tax residency, exit tax
at 19% (3% in specific cases) may apply on
unrealized gains.
Individuals under the age of 26 who derive
their income from employment or personal
service contracts are exempt from tax on
income up to PLN 85,528. Social security
contributions are still required, if applicable.
Capital gains – Capital gains are a separate
source of income. Capital gains derived
from the sale of real estate within five years
of the end of the year in which the property
was purchased are taxed at 19% (subject
to certain exemptions). Gains derived from
the sale of shares, stock, securities and
cryptocurrencies, together with investment
income such as dividends or interest, also
are taxed at the 19% rate (different detailed
taxation rules apply to various sources of
income within this category).
Deductions and allowances – Deductions
include items such as donations, certain
employee social security contributions,
expenses incurred by disabled persons
and, in certain cases, qualifying expenses
incurred for R&D activities or contributions
to an individual pension insurance account.
Personal allowances also are available (e.g.
a childcare allowance).
Foreign tax relief – Foreign tax paid may
be credited against Polish tax on the same
profits, but the credit is limited to the
amount of Polish tax payable on the foreign
income. Additional tax relief (“abolition
relief”) applies to income from certain
sources (e.g. employment or business
activity income) such that this foreign
income is effectively tax-exempt on a
progressive basis.
Compliance for individuals:
Tax year – Calendar year
Filing status – Individual tax returns
generally are required although married
couples and single parents may be eligible
to opt for preferential joint spousal/single
parent filing regimes.
Filing and payment – Advance payments
of income tax on an employee’s salary
or personal service contract income are
remitted to the tax authorities by the Polish
employer/company on a monthly basis.
Other income generally is self-assessed.
Individuals generally are required to submit
an annual tax return determining the final
amount of tax due by 30 April following
the tax year. Earlier filing dates apply for
the exit tax and lump sum tax regimes.
Payments of tax should be made to the
taxpayer’s individual bank account number
provided by the tax authorities.
Penalties – Individuals may be subject to
penalties for noncompliance.
Rulings – See “Rulings” under “Compliance
for corporations” above.
Withholding tax:
New withholding tax rules applicable to
certain cross-border payments exceeding
PLN 2 million per recipient per year have
been enacted but entry into force of the
new rules has been postponed until 30 June
2020 (for both corporations and individuals).
Generally, assuming the new rules will be
effective as from 1 July 2020, unless the
payer either: (i) provides the tax authorities
with a statement that a withholding tax
exemption or reduced rate is applicable;
or (ii) obtains an opinion from the tax
authorities that an exemption based on the
EU directives may be applied, the payer
must withhold tax at the standard rate on
the surplus over PLN 2 million at the time
of payment. A refund subsequently may be
requested from the tax authorities.
Additionally, as from 1 January 2019, payers
of income responsible for remitting the tax
must exercise appropriate diligence with
respect to verifying the grounds for applying
exemptions or reduced rates. Beneficial
ownership requirements also have been
strengthened as from 2019.
The Polish Ministry of Finance has issued
for public consultation draft explanatory
notes on certain practical aspects of the
new regulations, including an explanation of
beneficial owner and the extent of the due
diligence required by those responsible for
remitting the tax. However, no final version
of this document has been published yet
and further changes to the withholding tax
regime are expected during 2020.
Dividends – Dividends paid by a Polish
resident company to a nonresident company
or individual are subject to withholding
tax at 19%, unless the rate is reduced
under a tax treaty or the dividends qualify
for an exemption under the EU parent-
subsidiary directive, provided the dividend
is not related to a transaction (or a set of
transactions) undertaken to benefit from
a tax exemption and that does not reflect
economic reality. See “Withholding tax,”
above, for new rules applicable to certain
payments as from 1 July 2020 (assuming
no further postponement in the law’s
enactment).
Interest – Interest paid to a nonresident
company is subject to a 20% withholding
tax, unless the rate is reduced under
a tax treaty or the EU interest and
royalties directive, provided the interest
is not related to a transaction (or a set of
transactions) undertaken to benefit from
a tax exemption and does not reflect
economic reality. An exemption based
on the directive may be available only
if the recipient is the beneficial owner
of the interest. A 19% withholding tax
rate generally applies to resident and
nonresident individuals (unless reduced
under a tax treaty). See “Withholding tax,”
above, for new rules applicable to certain
payments as from 1 July 2020 (assuming
no further postponement in the law’s
enactment).
Royalties – Royalties paid to a nonresident
company or individual are subject to a 20%
withholding tax, unless the rate is reduced
under a tax treaty or the EU interest and
royalties directive provided the royalties
are not related to a transaction (or a set
of transactions) undertaken to benefit
from a tax exemption and does not reflect
economic reality. An exemption based on
the directive may be available only if the
recipient is the beneficial owner of the
royalties. See “Withholding tax,” above, for
new rules applicable to certain payments
as from 1 July 2020 (assuming no further
postponement in the law’s enactment).
Fees for technical services – See “Other”
below.
Branch remittance tax – No
Other – Fees for specified intangible
services (e.g. advisory, accounting, legal,
technical, advertising, data processing,
market research, recruiting, management,
control services, guarantees, etc.) are
subject to a 20% withholding tax (subject
to the provisions of an applicable tax
treaty). See “Withholding tax,” above, for
new rules applicable to certain payments
as from 1 July 2020 (assuming no further
postponement in the law’s enactment).
Anti-avoidance rules:
Transfer pricing – The Polish transfer pricing
rules generally follow the OECD guidelines
and if prices for related party transactions
are not in accordance with the arm’s length
principle, the tax authorities may make
an adjustment. Generally, two entities are
considered related parties if one entity
exercises effective influence over the other
(e.g. by owning, directly or indirectly, at
least 25% of its shares) or if the same entity
exercises effective influence over both of
them.
Transfer pricing documentation must be
prepared for related party transactions
(see “Disclosure requirements” below.)Safe
harbor provisions for transactions involving
loans and low value-added services have
been in effect since 2019.
Advance pricing agreements are permitted.
Interest deduction limitations – Deductions
of debt financing costs that exceed interest
or “interest- type” income are limited
to 30% of “tax EBITDA” (as defined for
purposes of the thin capitalization rules)
and/or PLN 3 million in a fiscal tax year.
The limit applies to all “debt financing
costs” (interest, arrangement fees, etc.)
on financing granted by both related and
nonrelated entities. Disallowed deductions
may be carried forward for five years, with
some exceptions.
Controlled foreign companies – Under
the controlled foreign company (CFC)
rules, Polish taxpayers are taxed at 19% on
the income of their CFCs. A subsidiary is
characterized as a CFC if the:
Entity is located in a country that engages
in “harmful tax practices;”
• Country of the entity’s seat or place of
management, registration or location does
not engage in the exchange of information
with Poland or the EU; or
• Polish company effectively controls or
holds (either on its own or jointly with its
related entities) over 50% of a foreign entity
that derives at least 33% of its revenue
from passive income; and the amount
of tax actually paid by the foreign entity
is lower than the difference between the
tax that would have been payable had the
entity been a Polish resident and the tax
the foreign entity actually paid. The rules
do not apply if a CFC carries out relevant
genuine economic activities. The tax base
(taxable income) under the CFC regime
may be reduced by the amounts already
included in the Polish taxpayer’s tax base
in respect of dividends received from a
CFC and income from the sale of shares
in a CFC. A specific anti-avoidance rule
applies under the CFC legislation, requiring
a business reason for the associations
between entities and ignoring artificial and
circular shareholding structures.
Hybrids – No
Economic substance requirements – No
Disclosure requirements – Certain
transactions must be reported to the tax
authorities and/or the National Bank of
Poland.
Transfer pricing documentation must be
prepared for related party transactions
exceeding certain thresholds in a tax year
(PLN 10 million for uniform transactions
including tangible goods or financial
transactions, PLN 2 million for uniform
transactions including services and other
types of transactions, and PLN 100,000
for transactions with entities located
in a country that engages in “harmful
tax practices”). As from 2020, domestic
transactions may be excluded from transfer
pricing documentation requirements if
certain conditions are met.
Taxpayers whose consolidated revenue
exceeds PLN 200 million also must prepare
a master file that contains additional
information about the whole related party
group.
All taxpayers obliged to prepare transfer
pricing documentation must submit a
statement confirming that they have the
compliant transfer pricing documentation
available and that the covered transactions
were concluded at arm’s length. Late
submission, failure to submit, or submission
of false statements may result in
penalties charged to the members of the
management board. Taxpayers also may be
required to prepare and submit a simplified
report on related party transactions (TP-R
form).
Transfer pricing documentation
requirements also apply to taxpayers
conducting business operations in forms not
having legal personality (e.g. partnerships).
Taxpayers whose consolidated revenue
exceeded the equivalent of EUR 750 million
in the preceding tax year also must produce
a country-by-county report, which contains
additional information about the income
and tax paid by group subsidiaries, their
places of conducting business and their
permanent establishments.
Mandatory disclosure rules apply to both
cross-border and domestic arrangements.
The obligation to report “marketable”
(repeatable) tax planning schemes falls
principally on the intermediary and is
performed on a no-names basis provided
the intermediary is compelled to secrecy
under legal professional privilege (i.e. is a
tax advisor, legal counsel or attorney at law)
and its secrecy obligation is not lifted by
the taxpayer. “Bespoke” (i.e. tailor-made)
schemes are reportable by the taxpayer,
unless the intermediary’s secrecy obligation
under legal professional privilege is lifted or
the intermediary is not entitled to invoke a
legal professional privilege.
Exit tax – Exit tax applies to corporations
(and individuals) in the case of a change
of tax residence or associated transfer of
assets outside of Poland.
General anti-avoidance rule – A general
anti-avoidance rule (GAAR) allows the tax
authorities to eliminate the tax benefit of a
transaction/action in cases where obtaining
such benefit is the main or one of the main
reasons for undertaking the transaction/
action and the conduct is artificial. In
assessing whether a tax benefit should
be deemed the main or one of the main
aims of performing a transaction/action,
the economic reasons for performing the
transaction/action as indicated by the
taxpayer must be considered.
In certain cases where the tax authorities
apply the anti-avoidance regulations,
additional tax liabilities may be imposed.
Value added tax:
Taxable transactions – VAT is imposed on
the supply of goods and services, the import
and export of goods to/from Poland, and the
intra-community acquisition and supply of
goods.
Rates – The standard VAT rate is 23%.
Preferential rates of 5% and 8% apply to
certain goods and services; other goods
and services (e.g. intra-community supplies,
exports, etc.) may be zero-rated or exempt.
A new VAT rates matrix applicable to
particular products and services will enter
into force in April 2020.
Registration – The registration threshold
for VAT purposes is annual turnover of
PLN 200,000 unless the entrepreneur is
engaged in an activity that is not subject
to VAT exemptions (e.g. sale of alcohol
and tobacco, provision of legal services).
Nonresidents that make taxable supplies of
goods or services in Poland generally must
register.
Filing and payment – VAT returns and a
JPK_VAT file (the Polish equivalent of the
Standard Audit File for Tax, SAF-T) must be
submitted and the VAT due paid within 25
days following the month in which the VAT
obligation arose. Taxpayers generally must
file VAT returns in electronic form, including
taxpayers that are EU VAT registered and
taxpayers that are suppliers or buyers
subject to the reverse charge mechanism.
Other possibilities regarding filing or
payment may exist in certain cases (e.g. a
quarterly reconciliation for small taxpayers).
VAT returns will have to be submitted in the
form of an updated JPK_VAT file as from 1
April 2020 for large taxpayers (i.e. taxpayers
either with more than 250 employees,
yearly revenue exceeding EUR 50 million or
a balance sheet (i.e. total assets) exceeding
EUR 43 million) and as from 1 July 2020 for
all other taxpayers.
A split payment mechanism is mandatory
for certain select transactions under
penalty of VAT sanctions. For other types of
transactions, the split payment mechanism
is voluntary with certain incentives for the
purchaser.
The tax authorities may impose penalties
of 20% or 30% of understated output VAT
or overstated input VAT, increased to 100%
of input VAT claimed from so called “empty
invoices.”
List of registered VAT taxpayers and
bank accounts (“white list”) – A taxpayer
entering into a transaction with a supplier
should check the person’s name and bank
account against the “white list,” a register
of all active VAT payers and their bank
accounts that is publicly available on a
government website. If the supplier or
the bank account is not included in the
white list, payments to the bank account
will not be tax deductible for income tax
purposes and the taxpayer will be jointly
and severally liable for the supplier’s VAT
arrears up to the value of VAT resulting from
the transaction. These rules apply as from
1 January 2020. The bank account should
be verified on the day of the transfer order.
However, if the payment is made to an
unreported bank account of a supplier who
is on the white list, the taxpayer will be able
to notify the head of the relevant tax office
about the supplier’s bank account number
within three days from the date of the
transfer order.
Other taxes on corporations and individuals:
Unless otherwise stated, the taxes in this
section apply both to companies and
individuals and are imposed at the federal
level.
Social security contributions – Employers
and employees must make social security
contributions in total equal to approximately
35% of an employee’s remuneration, subject
to certain caps, with approximately 21% paid
by the employer and 14% by the employee.
Contributions are withheld and remitted by
the employer, together with the employer’s
contribution. The employee contributions
are deductible when calculating the
employee’s taxable earnings. Employees
also are required to make a 9% healthcare
contribution, which is partly tax deductible
(and is collected and remitted by the
employer). Specific rules apply to self-
employed individuals.
Employee Capital Plans (PPK), which are
generally a type of retirement savings
plan financed jointly by the employee, the
employer and the government and operated
by third party financial institutions, were
introduced and apply as from July 2019 for
companies with over 250 employees, as
from 1 January 2020 for companies with 50
to 250 employees, as from 1 July 2020 for
companies with 10 to 49 employees, and as
from 1 January 2021 for all other companies.
Employees but also otherwise designated
hired individuals (subject to specific
regulations) may voluntarily participate in
PPK. Persons are enrolled by default but
have an option to opt out. Basic employee
contributions are 2% of gross remuneration
and basic employer contributions are 1.5%.
There are no caps.
Payroll tax – No, but an employer is
responsible for remitting social security
contributions and advance payments of
income tax on an employee’s salary.
Capital duty – Capital duty is levied on
corporations at 0.5% of the nominal value of
share capital.
Real property tax – Tax generally is levied
on the owner of real estate (land, buildings
and construction) at rates imposed by the
local authorities.
Transfer tax – Tax is imposed at a rate of
0.5%-2% on certain types of transaction
(e.g. sales, exchanges of rights, loans)
that generally are not covered by VAT. As
a rule, transactions exempt from VAT are
not subject to transfer tax (except for real
estate and shares).
Stamp duty – Stamp duty is levied, for
example, when filing a power of attorney
and when the (central or local) authorities
are requested to perform activities, such as
issuing certificates, granting approval, etc.
The applicable rates or fixed amounts are
specified in the stamp duty law.
Net wealth/worth tax – No
Inheritance/estate tax – Inheritance and
gift taxes range from 3% to 20%, subject to
certain allowances and exemptions.
Other – Excise tax is charged on the
turnover of selected goods. Shipping
companies may opt to pay tonnage tax on
certain types of income. A special tax is
imposed on the excavation of silver, copper,
crude oil and natural gas.
A tax on certain financial institutions
including domestic banks, branches of
foreign banks and credit institutions,
insurance and reinsurance companies and
loan institutions (excluding state-owned
banks) applies. The tax is charged on the
total value of assets exceeding PLN 200
million in the case of loan institutions,
PLN 2 billion for insurance and reinsurance
companies and PLN 4 billion for other
financial institutions, at a rate of 0.0366%
per month.
A tax on revenues from retail sales was
introduced in 2016, but its collection has
been suspended until 1 July 2020 due to
the initiation of proceedings concerning
possible incompatibility of the tax with EU
law (further postponements are possible).
In its current form, the tax would apply to
retailers whose monthly turnover exceeds
PLN 17 million at 0.8% on monthly turnover
between PLN 17 million and PLN 170 million,
and 1.4% on monthly turnover exceeding
PLN 170 million.
Exit tax applies to individuals in the case
of a change of tax residence or associated
transfer of assets outside of Poland. It also
applies to corporations (see “Anti-avoidance
rules,” above).
Tax treaties: Poland has signed the OECD
multilateral instrument (MLI) and deposited
its instrument of ratification with the OECD
on 23 January 2018 and the MLI entered
into force for Poland on 1 July 2018
Tax authorities: Minister of Finance, the
Head of the National Tax Administration,
Director of the National Tax Information,
heads of tax offices, heads of customs-
tax offices, directors of tax administration
chambers and some local authorities
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