Corporate income tax. Before we get to the substance of taxation, a few concepts should be clarified that may confuse readers:
Dochód (income) - in Poland this is the name for profit, i.e. material benefits obtained from a business's activity, reduced by expenses associated with that activity. Taxes, social and health insurance contributions, and other mandatory payments cannot be treated as expenses. Without deducting expenses, this figure is called revenue in Poland (przychód, revenue), however for legal persons only dochód counts, and przychód is not considered. The term "corporate income tax" or CIT (from English, Corporate Income Tax) applies here. We will discuss this type of tax below, however despite the name it is not the only type of payment to the budget that legal persons must make. We will refer to this specific tax using the common term CIT.
Who pays CIT
CIT must be paid to the Polish treasury by every company that has its registered office in Poland. Under the CIT law, therefore, the income of all businesses that can be registered in Poland without restriction by foreigners is taxed, namely:
- limited liability companies - Spółka z o.o.
- joint-stock companies - Spółka Akcyjna (S.A.)
- limited partnership - Spółka komandytowa
- limited joint-stock partnership - Spółka komandytowo akcyjna
As of 2023, two corporate income tax rates apply in Poland:
- 19% – the standard CIT rate
- 9% – the reduced CIT rate
Entrepreneurs whose annual turnover does not exceed 9,357,000 zł can benefit from the reduced 9% CIT rate.
Companies with foreign capital, i.e. companies where at least one co-founder is a foreign person or a legal entity registered abroad, can also benefit from the preferential 9% rate. Companies registered in Poland by foreigners are subject to the same rights and obligations as businesses registered by Polish or EU citizens.
Legal entities using the 9% rate also have the status of "small taxpayers" – mały podatnik. The 9% rate does not apply to income derived from capital gains. In Poland, income from the sale of shares and other securities is subject to the 19% rate.
CIT payment
The method of paying this tax is chosen in advance. It can be a payment in arrears, when:
Tax is calculated based on the previous year's results. The tax return is filed by March of the following year.
Another option is to pay in advance: a specific estimated tax amount is transferred to the tax office. Before March of the following year, a declaration is filed determining the actual tax due, along with any additional payment or refund. The taxable income can be reduced in the case of charitable donations, donations to the church, and certain types of reorganisation. Such a reduction is limited (typically no more than 10%) – all available options should be clarified with the tax authorities and regional authorities.