TAXES IN POLAND FOR COMPANIES AND INDIVIDUALS

In Poland, taxes are levied on both companiesand individuals, if these persons are recognized as its residents. If your company is registered in Poland and conducts its business and economic activities in Poland, it is considered as tax resident. In relation to individual, regardless of his citizenship, who stays in Poland for more than 183 days a year and receives taxable income during his stay will be considered as tax resident.

IMPORTANT! You should take into account stipulations of tax agreements between Poland and your country in order to avoid double taxation.

Let’s have a look at the most popular taxes in Poland applied to companies and individuals.

Taxes in Poland for companies.

As we said above, the residence of the company is an important factor in the taxation of legal entities. Companies registered in Poland are considered as tax residents. They are required to pay taxes on profits. To confirm your residency, you can always get a CFR1 certificate from the tax office. If the company is not a resident, then only the part of the profit that is received in Poland is taxed.

Income tax for companies (CIT / Podatek dochodowy odosób prawnych) or income tax.

The taxable base is calculated by subtracting using the formula:

revenue (i.e. turnover) – expenses = income, excluding VAT

Since 2020, there are two main income tax rates in Poland:

  • Tax 9% – is applied if the company’s annual income is less than 1,200,000 EUR. This rate is considered one of the lowest in the EU. This is a kind of support for small and medium enterprises –
  • Tax 19%. Applicable if the company has made annual revenues of more than 1,200,000 EUR, and if during the year the revenue was less and at the end of the year exceeded 1,200,000 EUR, then the 19% tax is applied for the whole year

Taxes in Poland for individuals.

Taxation of individuals in Poland is relatively simple,  its called –Personal Income Tax ( PIT / Podatek dochodowy od osób fizycznych).This tax must be paid by all persons who live in Poland and have income from entrepreneurial activity, or income from labor and civil law contracts, contracts of employment. There are two options for taxation:

Progressive scale with two thresholds.

Annual income PLN Rate
Up to 85 528 PLN 17%
More than 85 528 PLN 32%

 

 

The calculation is done as follows, for example, the annual income was 98,000 PLN. From 85,528 we pay 17%, from the remaining amount we charge 32% tax.

  • Linear or “flat tax” – involves the collection of 19% tax on all income, regardless of its size. But in this case, all tax benefits are lost. Basically, this tax rate is used by people doing business in Poland.

Additional to the income tax you have also social insurance tax. It applies to the  individuals who have income under labor and civil law contracts, it is important to understand that PIT payment is not all payments. In addition, wages are charged with contributions to various social insurance funds. They are paid by both the employee and the employer. The percentage is shown in the table below:

Contributions to funds Total % Employee % Company %
Retirement Fund 19,52 9,76 9,76
National health Fund 9,00 9,00 0,00
Disable fund 8 1,5 6,5
Medical insurance Fund 2,45 2,45
Accident Fund 0,67-3,86 0,67-3,86
Work Fund 2,45 2,45
Total: 28,48-33,17 22,71 19,48-24,17

 

To calculate the amount that will need to be paid to the state, you can use online calculators, which are widely available on many Polish sites.

How online calculators work.

  • Find an online calculator
  • Enter the desired income, for example 11,000 PLN ,,net,, or ,,gross,,
  • Select the type of contract, for example, “Employment contract”
  • Click “Calculate” and the system calculates the required fees

The system calculates and we get the amount that the employee will receive for payment, under this contract the employee will receive 7 846 PLN, and there you can also see the amount of contributions to the funds:

In online calculators, there is also an important tab – “Employer costs”, in which you can always see the amount of the tax burden on wages that the employer will pay for the employee. In our case, with a salary of 11,000 PLN, the employer will have to pay 13,267 PLN:

IMPORTANT! It should be noted that there are incentives for personal income tax. So, from August 1, 2019 in Poland, persons under the age of 26 are exempted from paying tax if their annual income does not exceed PLN 85,528. Income will be taxed only for an amount exceeding this threshold. The zero rate applies only to employment contracts and assignment contracts. A combination of different sources of income is allowed and this cannot limit eligibility.
Progress Holding - Business registration

Value Added Tax (VAT).

The base rate is 23%, used for all types of goods and services.

There are also preferential rates that are imposed on some types of goods and services:

  • 8% rate – hotel services, medicines, some types of passenger transportation
  • 5% rate – grocery, sale of ready-made foods, growing and marketing of certain types of plants
  • 0% rate – some socially important products and services

IMPORTANT! In the case of export for companies and individual entrepreneurs, you do not charge VAT. Export to individuals is taxed 23% VAT. Goods imported to Poland from EU countries are VAT taxed so called reveres tax, but VAT is not paid in this case. Goods imported into Poland from countries outside the EU are subject to VAT at the rate of 23%.

Polish resident company must  become a VAT payer if provides services as consultancy or revenues exceed 200 000 PLN annually, taking into consideration per annum proportion.

Dividend tax.

Dividends for individuals is taxed at a rate of 19%. If company receives dividend  its aggregated into overall income.

Dividends received by a company resident in Poland from another Polish company or a company from an EU and EEA country may be exempt from tax, but subject to certain conditions.

Excise duty.

In Poland, excisable goods include all types of oil products, electricity, alcohol, tobacco products, cars with engines over 2 thousand cm3.

Property tax.

This tax is levied on land, houses or parts of them, as well as buildings or parts of them that are related to the conduct of economic activities. The payer of this tax is:

  • Owners
  • Perpetual users
  • Spontaneous holders
  • In some cases – dependent owners of real estate or parts of it owned by the State Treasury or local governments.

The amount of this tax is determined by Local Authorities. The rates are estimated for 1 square meter and cannot exceed the rates announced by the Ministry of Finance for the current year. The tax is paid in four installments – until March 15, May 15, September 15 and November 15 of each year.

 



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