In Poland, two main corporate income tax (CIT) rates apply:
- 19% of the tax base (standard rate),
- 9% of the tax base (preferential rate) for companies with annual revenue of up to 2 million EUR.
While the application of the standard 19% rate does not generally pose particular difficulties, taking advantage of the preferential 9% tax rate requires meeting specific conditions.
Conditions for applying the preferential tax rate
The preferential corporate tax rate can be claimed by the following taxpayers:
- Small taxpayers whose gross sales revenue (including VAT due) in the previous tax year did not exceed 2 million EUR. The average EUR exchange rate published by the National Bank of Poland (NBP) on the first business day of October of the previous year is decisive.
- Companies whose net revenue in the current tax year is below 2 million EUR, calculated on the basis of the average EUR exchange rate announced by NBP on the first business day of the respective year. The amount is rounded to PLN 1,000.
Newly established companies can benefit from the preferential 9% corporate tax rate in their first tax year. However, the reduced rate does not apply if the company was created through restructuring (e.g., demerger), transformation into another legal form, or through the contribution of an enterprise worth more than EUR 10,000.
It should also be noted that in Poland, the following taxpayers are subject to corporate income tax (CIT):
- legal persons, including limited liability companies, joint-stock companies, foundations, associations, and cooperatives, and
- capital companies in formation.
Corporate income tax (CIT) in Poland is paid according to the following rules:
- The tax return must be filed by the end of the third month of the year following the tax year.
- During the tax year, no tax returns need to be filed, only advance payments, due by the 20th of each month. Quarterly advance payments are also possible.
- Proper bookkeeping (double-entry accounting) is required.
In addition to the preferential 9% corporate tax rate, the following tax benefits are available in Poland:
- preferential taxation under the so-called Estonian corporate tax system (Estonian CIT),
- the IP Box tax benefit for income from intellectual property (e.g., software),
- the tax benefit for research and development expenditure.
Principles of applying the “Estonian CIT” in Poland
The Estonian CIT (named after Estonia, which was the first country to introduce this tax model) defers the tax obligation to the moment when the company distributes the earned profit in the form of dividends. This allows the company to use a larger share of generated revenue for investments.
Under the Estonian CIT, there is no need to maintain tax accounting, determine tax-deductible expenses, or calculate tax depreciation. Monthly corporate tax advance payments are not required. Tax becomes due only upon profit distribution (dividend). This allows the company to flexibly determine the timing of taxation and allocate more funds to ongoing business activities and growth investments.
Moreover, the effective tax rate upon taxation (upon profit distribution) is lower than under classic CIT. It consists of corporate tax and dividend tax paid by the shareholder:
- For small taxpayers, the rate is only 20% instead of 26.29%,
- For all other taxpayers, the total rate is only 25% instead of 34.39%.
Estonian CIT can be used by joint-stock companies, limited liability companies, limited partnerships, limited joint-stock partnerships, and simple joint-stock companies. However, certain conditions must be met. The most important are:
- Revenue from receivables, interest, loans, leasing fees, guarantees, copyrights, industrial property rights, sale of financial instruments, and transactions with related entities must not exceed 50% of total company revenue.
- At least 3 persons must be employed under an employment contract for at least 300 days in the tax year.
- Shareholders or partners must be exclusively natural persons.
- The company may not hold shares in other companies.
It is important to emphasize that all these conditions must be met simultaneously.
Principles of applying preferential taxation (IP Box)
In Poland, taxpayers can benefit from preferential taxation of income resulting from the creation or improvement of so-called qualified intellectual property rights. The tax rate for this income is 5% and applies to both corporate income tax (CIT) and personal income tax (PIT).
The aim of this regulation is to promote the market for new technologies and innovative solutions by introducing preferential 5% taxation on income from qualified intellectual property rights – instead of the usual tax rates.
The application of IP Box requires meeting certain conditions. The most important include:
- Conducting research and development activities,
- Creating qualified intellectual property (qualified IP) as part of these activities,
- Generating income from qualified IP that is taxable in Poland,
- Incurring qualified costs related to the creation, development, or improvement of qualified IP.
The list of qualified intellectual property rights to which the preferential tax regime can be applied is exhaustive. According to the law, these include:
- Patents,
- Utility models,
- Design rights,
- Rights from the registration of approved medicines and veterinary medicines,
- Rights from the registration of semiconductor topographies,
- Copyrights in computer programs.