Before deciding to set up a business in a given location abroad, it is one of the first moves of the entrepreneurs to analyze the established taxation system there and opt for an alternative best suited to your company’s needs.
In Poland there are two primary types of income taxes that would most likely concern you as an entrepreneur, that is:
- PIT (Personal Income Tax)
- CIT (Corporate Income Tax)
PIT is a type of a direct tax imposed on natural persons, or more precisely, their income. You do not need to be a Polish resident to be covered by the tax. It is enough that your revenue is generated within the territory of Poland. Currently, there are three forms of PIT that individual entrepreneurs can generally choose from:
| PIT FORM | TAX RATE |
| Tax scale | 12% (income up to PLN 120,000) or 32% (excess income) |
| Flat tax | 19% |
| Lump sum tax | from 2% to 17% depending on the type of business note: business expenses are non-deductible |
CIT, on the other hand, is imposed on legal persons based on their income. In other words, your companies (as separate entities) pay this tax. Again, there are two applicable rates, which depend on the business type.
| CIT TAX | FOR WHOM? |
| reduced 9% rate | small taxpayers (with sales revenue not exceeding EUR 2 million) + new businesses (in their first tax year)* |
| standard 19% rate | others |
* the 9% rate cannot be applied if the new company fulfils other statutory requirements.
To sum up, when starting a business in Poland, you and your company will be subject to two separate types of tax, that is PIT (a natural person’s income) and CIT (a company’s revenue).
In addition to this, individuals and companies also have other tax obligations, but in this article we have only focused on income taxes. Other taxes require a broader, separate description.
Finally, it is worth pointing out that the Polish tax law has been undergoing many amendments as for its detailed regulations, and for that reason we strongly recommend that you seek professional advice when deciding on a given tax form to best tailor it to your company’s needs.
To know more about the tax system in Poland, please contact us directly. We will be happy to answer your questions.
