Guide to Taxation for Companies in Poland

Running a company in Poland involves various forms of taxation, depending on the type of company chosen. This guide will discuss the main types of companies and their associated tax obligations.

Types of Companies in Poland

1. Limited Liability Company (Sp. z o.o.)
2. Joint-Stock Company (S.A.)
3. Registered Partnership (Spółka jawna)
4. Professional Partnership (Spółka partnerska)
5. Limited Partnership (Spółka komandytowa)
6. Limited Joint-Stock Partnership (Spółka komandytowo-akcyjna)

Taxation of Capital Companies

Limited Liability Company (Sp. z o.o.) and Joint-Stock Company (S.A.)

Sp. z o.o. and S.A. are taxed under the same rules. These are capital companies subject to corporate income tax (CIT).

Corporate Income Tax (CIT)

• Standard CIT rate: 19%
• Reduced CIT rate: 9% for small taxpayers and newly established companies in their first tax year, if their revenue (including VAT) did not exceed 2 million euros

Advantages: - Ability to deduct costs of earning income - Possibility of depreciating fixed assets

Disadvantages: - Double taxation: first at the company level (CIT), and then at the shareholder level (dividends)

Dividends

Dividends paid by capital companies are subject to a flat-rate income tax (commonly referred to as dividend tax) at a rate of 19%.

Taxation of Personal Companies

Registered Partnership and Professional Partnership

Registered partnerships and professional partnerships are not subject to CIT. The income tax is paid by the partners, not the company itself. The company’s income is taxed at the partner level according to their share in the profits.

Personal Income Tax (PIT)

Partners of registered and professional partnerships can choose the form of taxation:

• Tax scale (general rules): 17% and 32%
• Flat tax: 19%

Limited Partnership and Limited Joint-Stock Partnership

As of January 1, 2021, limited partnerships and limited joint-stock partnerships are treated as capital companies and are subject to CIT.

Corporate Income Tax (CIT)

• Standard CIT rate: 19%
• Reduced CIT rate: 9% for small taxpayers and newly established companies in their first tax year, if their revenue (including VAT) did not exceed 2 million euros

Dividends

Similar to Sp. z o.o. and S.A., dividends paid by limited partnerships and limited joint-stock partnerships are subject to a flat-rate income tax of 19%.

Value Added Tax (VAT)

Companies engaged in economic activities are also subject to Value Added Tax (VAT). The standard VAT rate in Poland is 23%, but there are also reduced rates (8%, 5%, 0%) for specific goods and services.

Civil Law Activities Tax (PCC)

In certain cases, companies may be required to pay the Civil Law Activities Tax, for example, when entering into contracts for the sale of shares or stock. The PCC rate is 1% of the market value of the contract subject.

Summary

Taxation of companies in Poland depends on their legal form. Capital companies (Sp. z o.o., S.A.) are subject to CIT and may face double taxation of income. Personal companies (registered partnerships, professional partnerships) are taxed at the partner level. It is important to carefully analyze the type of business activity and the expected income to choose the most beneficial form of taxation.

Timestamp: July 29, 2024, 12:41 a.m.

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