Overview: Taxes In Poland
Are you an investor who has set up a business in Poland? If you are then one of the crucial steps that you must do after registering a company in Poland is to register with the tax authorities. Every company which is registered in Poland has to pay business taxes. There are various types of taxes that must be paid such as value-added tax, personal income tax, and business income tax in Poland. The amount of tax paid depends on the revenue generated by the corporation. Generally, the corporate tax in Poland ranges from 9% to 19% based on the revenue generated by the firm.
Through this article, we will briefly explain the taxes in Poland. We will discuss the Polish tax structure, compliance standards, and the legal basis for paying taxes in Poland.
Types of taxes in Poland
There are various types of taxes in Poland that must be paid by individuals as well as corporate entities such as the ones mentioned below:
- Inheritance and donations tax
- Agricultural tax
- Forestry tax
- Tax on dogs
- Tax on transactions of civil law
- Real estate tax
- Tax on means of transport
- Corporate income tax
- Personal income tax
- Game tax
- Exercise Duty
- Value Added Tax (goods and services)
Who payes taxes in Poland?
An adult who is designated as a Polish tax citizen is subject to Polish taxable income on all of their international earnings, according to Polish legislation. The taxpayer is regarded to have an unrestricted tax burden under these situations. In contrast, if a person is a non-resident of Poland for taxation purposes, they are regarded to have a restricted Polish tax responsibility. As a result, the taxpayer is solely subject to Polish tax on profits earned in Poland.
An individual is probably a native of Poland if most one of the essential criteria is met:
- If the person’s personal or trade cooperation with Poland is stronger (center of vital interests in Poland).
- And if in a given financial year, an average person spends more than 183 days on Polish soil.
For an entity to be recognized as a tax citizen of Poland, only one of the above qualifications must be met.
Corporate tax in Poland
Poland which is located in Europe has one of the lowest rates of taxation which makes it one of the best countries for registering a company in Europe.
The general rate of corporate income tax in Poland is 19%.
Although, a lowered rate of 9% is applicable on earning, excluding capital gains, under certain situations such as the following mentioned below:
- If the taxpayer is a small taxpayer with sales revenue that doesn’t surpass two million Polish zloty.
- If the taxpayer began operating, so long as the establishment of the business did not come about as a result of a merger or other change (during the 1st tax year).
Polish tax residents are subject to tax on their worldwide income unless there is an applicable double tax treaty in place between Poland and the relevant country that provides that the foreign income shall be exempt from taxation in Poland. Non-residents are taxed only on their Polish-sourced income.
Tax residents of Poland are liable for tax on their global earnings except if a double taxation avoidance agreement between Poland and the other nation is in effect and specifically states that the foreign earnings will be free from taxation in Poland. Non-residents only pay taxes on their revenues that come from Poland.
VAT In Poland
In Poland, the typical VAT rate is 23%, however, redacted rates of 8%, 5%, and 0% are also applicable to certain products and services.
All supplies of goods and services are subject to the regular 23% VAT rate, with the exception of those governed by special VAT rules that offer different rates or treatments.
Certain deliveries are subject to a discounted VAT rate of 8% like medical goods and transportation for passengers.
The Ministry of Economy is in charge of enforcing Polish VAT, which is governed by value-added tax statutes and the Administrative Criminal Code. Non-resident VAT commerce is when a multinational corporation from within or outside the Union registers for VAT in Poland without establishing a Polish corporation or establishing a fixed place of business.
Aside from remote exports to Poland, there is no VAT limit for non-resident businesses in Poland, and a value-added tax registration must be obtained before includes a combination can begin. There is some leeway for recovering Polish VAT that was paid before the certification. A financial representation is essential for a non-EU dealer’s Tax payments in Poland.
The instances in which a certification is required are governed by rigorous regulations. The following are examples of circumstances that necessitate a Registration certificate in Poland:
- Marketing to individual citizens in Poland over the internet.
- Throughout Poland, commodities are sold.
- Shipping and manufacturing commodities into and out of Poland.
- Exporting Polish commodities to other European nations.
The time it takes to register a Company in Poland is typically 3 weeks, although it can take anywhere from a single day to over months, depending on the condition and thoroughness of the paperwork given.
Dividend tax in Poland
Polish enterprises are excluded from retaining tax on earnings if the payment recipient is located in another EU nation and collects the relevant taxes on its employees around the world, as per the Polish involvement exemptions. In Poland, investment income is taxed at a rate of 19%. If specific requirements are met, money received by Polish companies from another Polish business or a commercial company in the EU area and Switzerland is tax-free.
Interest and dividends from outside the United States:
Dividends and interest from a non-resident by a Polish corporation tax residence are primarily categorized as normal personal income tax rate at the conventional CIT percentage.
CIT on such profits received in other jurisdictions may be deducted towards Polish CIT correspondingly. Furthermore, income earned from employed determined in the European Union which includes Poland, EEA member countries, or Switzerland are able to benefit from CIT if the Polish firm acquires at least 10% in the case of a public company based in the EU member states or 25% in the ordinary course of its business based in Switzerland of the payer money shareholding for 2 years and certain other conditions are met.
Anti-avoidance laws are in place to prevent people from avoiding paying taxes:
The involvement exclusion on earnings and other revenue reimbursements does not implement a lawful consideration or sequence of matters of law that are not legitimate, given all applicable circumstances of the case, and were implemented for the original aim or one of the primary aims of collecting a tax incentive.
A not legitimate legal transfer of funds, according to the new requirements, is one that is conducted in order to profit from a tax deduction but does not exemplify financial reality that is not carried out for legitimate business reasons and its consequence is, in general, and especially, the transfer of shareholdings’ control of the company earning the earnings or the achievement of revenue paid in the form of dividends to shareholders by this corporation.
Interest and dividends earned in the United States:
Foreign pay-outs net profit earned from Polish nationals are not included in overall revenue. However, a 19% tax liability is applied on such earnings, which is deducted and submitted to the tax department by the income recipient. Local earnings, on the other hand, are not liable to the 19% WHT if the Polish benefactor owns at least a 10% ownership in the receiving employer for at least 24 months, thanks to an involvement exemption.
The earnings received through the voluntary exchange of interests are not taxed as a profit and do not qualify for the contribution deduction that is the procedure of redemption, whether voluntary or automatic, will matter.
Taxation Compliance For Companies In Poland
Tax is quickly now one of the most comprehensive compliance difficulties and expenditure items for organizations doing business around the world. Increasing taxation rates, or increasing inspections and standard operating procedures to trigger fines and financial consequences, is seen as a major element of strengthening financial foundations in difficult nations around the world. When you add in the absence of standardization among authorities, the load rapidly becomes unbearable.
The following tax compliance services that Poland can provide are as follows:
- Administering examinations and responding to government inquiries.
- Throughout tax assessment, support is available.
- Taking care of fundamental financial questions, reports, and penalties.
- Identification with the appropriate tax authorities.
- Tax estimates and negotiations with the authorities are assisted.
- Tax statements are prepared and submitted.
- Meeting the needs of business rates and areas of its operations expenses.
Using regional savings accounts to manage registrations and reimbursements.
Read More: Opening A Bank Account In Poland
Legal Basis For Paying Taxes In Poland
Open, unfunded, obligatory, and non-returnable payments to the government coffers, provinces, districts, or municipalities make up the Polish taxation system. The requirements of the Internal Revenue code also extend to charges and other non-tax obligations for the government budget and city government finances, which are allowed by the tax administration and governed by municipal excise tax decisions.
In the last 25 years, the Polish taxation system has progressed at a breakneck pace. This choice was reached by the Polish government in order to stimulate international investors and raise the labor supply. Amongst actions used to achieve this goal, Poland decreased its taxable income from 40% to 19%, making it one of the cheapest in Central and Eastern Europe.
The legal justification for tax obligation in Poland was founded by the Polish Constitution in Article 217, which states that the attempt to impose taxation and other community expenses, as well as the perseverance of subject to tax activities pertaining to payment of taxes in Poland, tax rates, categories of taxpaying citizens exempted from having to pay taxes in Poland, and the guidelines for obtaining tax exemptions and reduce symptoms, can only be accomplished by legislation and rules founded by the Polish Constitution.
Taxes in Poland play a crucial role in the country’s development and are crucial for funding public services and infrastructure development. The Polish tax system is characterized by progressive income tax rates, value-added tax (VAT), corporate income tax, and various other taxes and social security contributions. Understanding the tax system in Poland is crucial for individuals and businesses to fulfill their tax obligations accurately. Knowing the tax system’s, rates, compliance necessities, and deductions enables both people and corporations to pay their taxes on time while also improving their financial situation.
If you have any more queries regarding the Poland tax system or you want to set up a business in Poland, you can get in touch with our experts from OnDemand International. Our specialist will be happy to assist you with any queries you may have.
Individuals of Poland contribute personal income tax on their international earnings. Non-residents are liable to Polish personal income tax on their Polish-sourced income solely.
Visitors who make purchases on Polish soil are authorized to acquire an Income document listing of all the items acquired. The certificate from the checkout counter should have been included in the application.
To prevent double taxation, Poland has negotiated tax accords with various nations. These agreements are meant to stop people and companies from paying taxes on the same income twice in various countries.
For the majority of enterprises, Poland’s corporate income tax rate is a uniform 19%. A lower tax rate of 9% is offered to small taxpayers who meet certain requirements, nevertheless.
Yes, Poland does offer a number of tax breaks and exemptions. Tax deductions for housing, medical care, and educational costs are also covered, as are payments to pension plans and charitable donations.