When considering the prospects of starting a business in a particular country, any entrepreneur should understand the content and scope of the tax burden that his business will face within the framework of a foreign legal system. This is a prerequisite for determining possible ways to optimize taxation and, most importantly, calculate the profitability of his business.

Poland is no exception in this context.

At the stage of planning a business in Poland, you should familiarize yourself with the general provisions on taxation of economic activities in this country, as well as find out the features of the tax regime for the type of business you plan to engage in. If in the first case you can obtain the necessary information yourself from existing information resources, then for details you should contact the relevant specialists in Poland – accountants, lawyers or auditors.

In general, Poland uses a progressive taxation system, which is a reflection of the European system, but at the same time is characterized by moderate, average rates compared to other EU countries.

As a general rule, companies and individuals who are not residents of Poland are subject to taxation in the same manner as residents of Poland.

Legal entities that operate in Poland or receive income there receive a tax identification number (NIP) and must register with the relevant tax authority.

Among the main taxes in Poland, one should definitely highlight VAT (value-added tax).

This tax is charged on almost all goods, works or services. The rates vary:

– 23% – the basic VAT rate. Currently, the Polish legislator is considering changing this rate and, possibly, from next year, VAT in Poland will be reduced to 22%.

– 8% – applies to pharmaceutical and medical products, passenger transportation services, services related to temporary accommodation and residence, housing construction, etc.

– 5% – applies to such groups of goods as bread, meat, dairy products, books and periodicals.

In turn, there is also a zero VAT rate, which is applied when purchasing and supplying goods from EU countries to Poland.

To obtain the status of a VAT payer, you must apply to the tax office with an appropriate application. Filing such an application is free of charge. The procedure is similar to obtaining the right to be a VAT payer within the EU (VAT UE).

Every month, by the 25th, the taxpayer must submit a VAT declaration. Tax payment for the current month is made by the 25th of the following month.

Polish law does not provide for the obligation for companies to register as VAT payers if your annual sales do not exceed 150,000.00 zł. (34,000 euros). However, having such a status is rather a requirement of modern realities, since otherwise most counterparties will simply not do business with you.

An important advantage of Poland for doing business is the possibility of refunding the VAT paid “in cash”. Thus, at the request of the taxpayer, VAT refund can be made by reducing his tax liabilities or by actually transferring funds to him.

A separate place in the Polish system of taxation of business activity is occupied by the CIT (corporate income tax) tax – a tax on the profit of a legal entity. The tax base is traditionally the positive difference between the company’s income and its expenses for the reporting period. The tax rate is 19%.

A tangible advantage when calculating CIT is the possibility, provided for by Polish law, of including almost any expenses related to the company’s activities and having documentary confirmation (including fuel or accommodation expenses during business trips, advertising expenses, etc.) as part of the company’s expenses. It is important that the invoice confirming a particular expense of the company is issued specifically for your company.

The corporate income tax (CIT) return is filed once at the end of each year. At the same time, the payer is given the opportunity to independently determine the amount of tax each month and pay it in advance.

Do not forget about the personal income tax (PIT), which is required to be paid by everyone who receives income in Poland (salary, based on employment contracts or civil law agreements, income from individual entrepreneurial activity, etc.).

Individuals must prepare and submit tax returns to the tax office no later than April 30 of each year.

An interesting fact is that Polish law provides the opportunity for spouses to jointly declare and pay RIT. As a result, this allows you to pay less, especially if only one of the spouses works.

To calculate the amount of PIT tax in Poland, the so-called “progressive system” is used, namely:

– if the earnings during the year amounted to less than PLN 85,528 (about EUR 20,000), the tax rate will be 18%;

– if the earnings during the year amounted to more than PLN 85,528, the tax rate will be 32% (for the part with exceeding the specified amount).

Individuals engaged in individual entrepreneurial activity may be subject to the so-called linear tax, which is 19% of the income received. In this case, the “progressive system” does not apply. It is also worth noting that for foreigners (including citizens of Ukraine) the PIT tax rate is slightly higher and is 20%.

These taxes are basic, and everyone who intends to engage in entrepreneurial activity in Poland will have to pay them. In this context, it is also important to enlist the help of a professional accountant to be sure of the correctness of filling out and submitting tax declarations and reports.