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Tax rates in Poland

Tax Rates

Consumption Taxes

Nature of the Tax
Podatek od towarow i usaug (PTU) (Value-Added Tax)
Tax Rate
23%
Reduced Tax Rate

Supplies covered by a reduced rate of 8% include: certain food products (e.g. sugar, spices, certain processed and preserved food); newspapers and periodicals (including e-publications other than publications wholly or predominantly consisting of video content or audible music) – except regional or local periodicals (printed or on disks, tapes and other media); goods and services of a kind normally intended for use in agricultural production (e.g.animals, plants, seeds, fertilizers and plant protection products - see after); animal feeding stuffs; veterinary services; healthcare products (pharmaceutical products; medical devices; certain disinfectants applied in health protection); selected devices for the blind; services related to admission to cultural, sports and recreational events (admission to shows, theatres, circuses, amusement parks, concerts, museums, zoos, cinemas etc., admission to sporting events and use of sporting facilities); lending in libraries of books and newspapers;;services of general interest (e.g. supply of water, supply of services provided in connection with street cleaning, refuse collection and waste treatment, other than the supply of such services by public bodies); funeral services; transport of passengers and their accompanying luggage; reception of radio and television broadcasting services (excluding VOD); the supply, construction, renovation, modernisation, thermal modernisation or conversion of buildings or parts thereof subject to the social housing programme (single-family houses up to 300 square meters and flats up to 150 square metres); maintenance of private dwellings, excluding materials which account for a significant part of the value of the service supplied; accommodation provided in hotels and similar establishments; food and beverages serving services (excluding the supply of beverages and goods unprocessed by the taxpayer - other than those that are subject to a reduced rate, as well as seafood; some labour intensive services (hairdressing services, repair of footwear and leather goods, repair and alteration of clothing and home textiles, bicycle repair).

Supplies covered by a reduced rate of 5% include: basic foods (e.g. bread, meat, fish, fruits and vegetables, dairy products, bakery products, farinaceous products, eggs, fruit and vegetable juices, soups, broths, homogenised and dietetic food - see after); products for children and hygiene products (food for infants and toddlers, pacifiers, nappies, car seats, sanitary pads and tampons and); printed books, books on disks, tapes and other media and e-books (other than publications wholly or predominantly consisting of video content or audible music) as well as regional or local periodicals (printed or on disks, tapes and other media).

Zero-rated activities include exports, intra-Community supplies of goods, supplies of certain sailing vessels, international transport and related services, supplies of computer equipment to educational institutions.

Under new legislation approved to mitigate the effect of surging inflation, a reduced 5% VAT rate on electricity is to apply from 1 February 2022 until 31 July 2022, while a 0% VAT rate on natural gas is to apply from 1 January 2022 through 31 July 2022. Furthermore, reduced VAT rates apply on:

  • from 5% to 0%: food products such as fish and fish products, dairy products, vegetables, fruit, including fruit and vegetable products, cereals, products of the milling industry, cereal and bakery products and some beverages
  • from 8% to 0%: fertilizers, pesticides, potting soil, and other measures supporting agricultural productions
  • from 23% to 8%: diesel fuel and motor fuels (from 1 January 2022 through 31 July 2022).
Other Consumption Taxes
Excise duties apply on alcohol, cigarettes, energy products (e.g. petrol, oils, gas), passenger cars, and electricity.
A sugar tax is levied on the trade of beverages containing sugar, sweeteners, caffeine and taurine (PLN 0.50 for the content of sugars in an amount equal to or less than 5 g in 100 ml of drink, or for the content of at least one sweetener in any amount; PLN 0.05 for each gram of sugar above 5 g in 100 ml of drink; PLN 0.10 per litre is payable on drinks containing caffeine or taurine).
A number of taxes are levied by the municipalities, including road vehicle tax and a transfer tax applying to certain civil law transactions, etc.

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Corporate Taxes

Company Tax
19%
Tax Rate For Foreign Companies
Non-residents are only taxed on Polish-sourced income at the same conditions as local companies. Residents are taxed on worldwide income, with foreign tax credit available.
Capital Gains Taxation
Capital gains are generally treated as a separate source of income and are subject to the standard 19% corporate income tax rate. An exemption may be available for venture capital companies (that are taxpayers for corporate income tax purposes) on gains from the transfer of shares that are acquired between 2016 and 2023 in companies performing R&D activities, provided certain requirements are met.
Capital losses are tax-deductible.
Main Allowable Deductions and Tax Credits
Costs incurred for the purposes of deriving, securing or preserving a source of revenue are generally deductible.
Accrued interest on loans and credit that were paid or capitalised are deductible for corporate income tax purposes. From 2020, creditors may reduce their tax base by the value of receivables if monetary payment has not been paid or sold after 90 days from the invoice due date.
Companies are entitled to deduct donations for the purposes of public benefit and to volunteer activity organisations up to a total amount not exceeding 10% of income.

Deductions may be claimed for royalties, management services, and interest charges paid to foreign affiliates. Taxes can generally be deducted (except for CIT, industry-specific taxes and VAT). Certain fines and penalties can be deducted.

Expenditure incurred for research and development (R&D) is deductible up to 100% of corporate income tax (varying according to the size of the company and the type of eligible costs). Expenditure incurred for covering the cost of staff hired in the context of R&D activities are also tax-deductible. From 2022, such deduction has been increased from 100% to 200%. Taxpayers can benefit from a deduction of investments made in robotization from the beginning of the 2022 fiscal year until the end of the 2026 fiscal year. The deduction may not exceed the amount of income in a given tax year. An additional deduction for marketing expenses up to PLN 1 million related to an increase in revenue from the sale of products has been introduced in 2022.

As a general rule, transactions with a value above PLN 15,000 can only be deducted when paid using a bank transfer.

Net operating losses can be carried forward up to five years, capped at 50% of losses incurred in a tax year. From 2020, a taxpayer may deduct from the tax base once over the next five consecutive tax years up to PLN 5 million of the loss incurred. Any loss above this limit may be deducted in the other years, capped at 50% of the loss incurred in the year for which it was reported. The carryback of losses is not permitted.

Other Corporate Taxes
Other taxes levied include capital duty (0.5% of the nominal value of share capital), specific intangible services paid to non-residents (20% withholding tax on services e.g. legal, accounting, advertising, market research, recruiting, guarantees), an excise tax on turnover of selected goods and tax on extraction of certain materials. Inheritance and gift taxes range between 3% and 20%, subject to certain allowances and exemptions.

Real property tax rates are fixed by municipalities within limits set in the Law on Local Taxes and Fees. In 2022, land used for business purposes is subject to a rate of PLN 1.03 per square metre. Buildings used for business purposes are subject to a rate of PLN 25.74 per square metre (depending on local authorities). Stamp duties and a transfer tax (0.5-2% on transactions such as sales and loans that are not covered by VAT) also apply.

As far as the social security system is concerned, employer contributions range from 19.48% to 22.14% of the employee’s gross salary; the contribution rate for the employee is 13.71% of gross salary. The rates apply to salaries below PLN 177,660 (2022). Above this limit, the salary is subject to a contribution rate of 3.22% to 6.41% payable by the employer (2.45% payable by the employee). Contributions to a new type of retirement savings plan financed jointly by the employee, the employer and the government (Employee Capital Plans - PPK), are equal to 1.5% for the employer and 2% for the employee. Persons are enrolled by default but have an option to opt out.

An additional tax is levied on the activities of certain financial institutions including local banks, branches of foreign banks, insurance and reinsurance companies. The tax applies at a rate of 0.0366% per month when the value of assets exceeds PLN 200 million in the case of credit institutions, PLN 2 billion in the case of insurance and reinsurance companies and PLN 4 billion in the case of other financial institutions.
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

An income tax from retail sales was introduced in 2016 (for any monthly turnover exceeding PLN 17 million); however, it had been suspended until 1 January 2021 as it was found in breach of the EU law. It finally came into force last year. The tax applies to retailers whose monthly turnover exceeds PLN 17 million at 0.8% on revenues up to PLN 170 million; and 1.4% on revenues in excess of this amount.

Other Domestic Resources
Ministry of Finance
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Poland Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 7.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 334.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 40.8 36.5 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Income tax Progressive rate from 17% to 32%
Tax base below PLN 120,000 17% minus amount-decreasing tax (the tax-free amount is income up to PLN 30,000)
Tax base above PLN 120,000 PLN 15,300 + 32% amount exceeding PLN 120,000
Solidarity surtax (for individuals with annual income from specific sources over PLN 1 million) 4% on the income exceeding PLN 1 million
Individuals running business activities (as sole traders or as partners in partnerships) Discretionary flat 19% income tax rate (subject to certain conditions)
Individuals under 26 with income from employment or personal service contracts exemption on income up to PLN 85,528
Allowable Deductions and Tax Credits
Deductions apply to items such as donations (capped at 6% of taxable income, with special rules for COVID-19-related donations), Polish and EU national social security contributions, expenses incurred by disabled persons and some expenses incurred on technical knowledge or contributions to an Individual Pension Insurance Account. Interest is also deductible on an accrual basis. Foreign tax relief is also available; however, the amount of tax credit cannot exceed the amount of domestic tax that would have been due should the foreign income have been derived in Poland. Health insurance contributions cannot be deducted from tax liability due (it was possible up to the annual tax return for 2021). From 2022, a new tax relief applies to individuals who receive income from an employment contract and business activity for an amount between PLN 68,412 and PLN 133,692.

A standard deduction applies to employees, generally at PLN 250 per month. The annual limit of tax costs from one's employment currently cannot exceed PLN 3,000.
An independent worker may claim various allowances, depending on the type of activities performed (the standard deduction usually amounts to 20% of the revenue, but can go up to 50% or PLN 120,000 for creative activities).

As of January 1, 2022, taxpayers earning income taxed according to the tax scale are entitled to a personal allowance of PLN 30,000. From the same date, a
tax relief was introduced for single parents, for a deduction of PLN 1,500 per year from the personal income tax due.

The annual income tax can be further reduced by:
- PLN 1,112 per child in a family consisting of one child, provided that the taxpayers’ joint annual taxable income is not higher than PLN 112,000 (for married taxpayers) or PLN 56,000 (for single taxpayers)
- PLN 1,112 per child in a family consisting of two children (irrespective of taxpayer’s income), or
- PLN 1,112 per first and second child, PLN 2,000 per third child, and PLN 2,700 per fourth and each subsequent child in a family consisting of three or more children (irrespective of taxpayer’s income).

Individuals running business activities as sole traders or partners in partnerships can deduct all expenses incurred in order to derive revenue or to "protect a source of income", unless differently specified.

Special Expatriate Tax Regime
Residents pay personal income tax for worldwide income while non-residents pay PIT only on Polish-source income. Expatriates and natives pay the same taxes in Poland.
In many cases, non-residents can benefit from a 20% flat tax rate calculated on their revenues (i.e. with no deduction of costs). The flat tax applies to various sources of income, excluding employment contracts.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of tax treaties signed by Poland (in Polish)
Withholding Taxes
Dividends: 0% (resident companies)/19% (resident individuals and non-residents), Interest: 0% (resident companies)/20% (non-resident companies)/19% (individuals), Royalties: 0% (resident)/20% (non-resident)
The above rates may be reduced as part of a tax treaty.

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Latest Update: June 2022