POLISH TAX SYSTEM

Donations for polish company

VALUE ADDED TAX (VAT)

value-added tax (VAT), in some countries known as a goods and services tax (GST). It is a type of general consumption tax that is collected incrementally, based on the increase in value of a product or service at each stage of production or distribution. VAT is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer. VATs raise about a fifth of total tax revenues both worldwide and among the members of the Organisation for Economic Co-operation and Development (OECD).

The European Union value added tax (EU VAT) is a value-added tax encompassing member states in the European Union VAT area. Joining in this is compulsory for member states of the European Union. As a consumption tax, the EU VAT taxes the consumption of goods and services in the EU VAT area. The EU VAT’s key issue asks where the supply and consumption occurs thereby determining which member state will collect the VAT and which VAT rate will be charged. In Poland VAT was introduced in 1993.

VAT rate is 23%. However, there are certain exceptions.

VAT rate for transportation, health-care, tourist services and newspapers is 8%. The same with house renovation and distribution of water.  5% is applicable for certain food and books distribution. What is more – some products, art, financial, postal and educational services are exempted from VAT.

 

VAT in Poland applies to the following transactions:
– Exports of goods outside the European Union;
– Supply of goods and services that has been made in Poland;
– Import of goods.

Taxes in Poland

VAT Registration in Poland

Only companies with an annual turnover higher than 50,000 PLN (11,500 EUR) are obliged to register for VAT in Poland. Companies should be registered with the local Tax Authorities. The procedure can be started immediately after obtaining the registration certificate from the National Court Register.

 

 

CORPORATE INCOME TAX (CIT)

Tax on the income of companies (enterprises) being a type of direct tax that charges income earned by legal persons.

Income Tax CIT for Polish companies – the lowest rate in EU – only 9%!

 

From the beginning of 2019 the reduced rate of 9% is available for taxpayers with income in
the current tax year lower than PLN equivalent of EUR 1 200 000.

Foreign entrepreneurs who are selling goods and services with low deductible cost ratio can benefit from changing its structure to Polish limited liability company.

 

General rules:

19% CIT is the only tax on the income of legal persons. As a rule, the provisions of EU directives have been implemented in the Polish tax system.

CIT rate – 19%

Withholding tax: dividends – 19%

interest – 20%

royalties – 20%

intangible services – 20%

Tax on branch profits – lack

 

 

 

Taxpayer:

Pursuant to the provisions of the Act, corporate income tax payers are:

limited liability companies, joint-stock companies and other legal entities;
capital companies in the organization;
limited joint-stock partnerships with headquarters or management in the territory of the Republic of Poland;
unincorporated companies with their registered office or management in another country, if, in accordance with the tax laws of that other country, they are treated as legal persons and are subject to tax in that State on their entire income irrespective of their place of performance;
organizational units without legal personality, with the exception of civil, registered, partner and limited partnerships;
tax capital groups.
Partnerships, except limited joint-stock partnerships, are not CIT taxpayers. Income earned by partnerships is allocated to partners and is subject to CIT at the level of partners, including their other income.

Taxpayers with headquarters or management in Poland are subject to CIT in Poland on their total income. Taxpayers not having their registered office or management in Poland – only from income earned in Poland.

However, the provisions of the Act do not apply to:

income from agricultural activity, except income from special departments of agricultural production, unless revenues are determined in order to determine income free of income tax,
revenues from forest management,
revenues which result from activities that can not be the subject of the contract,
income / income of shipowners subject to tonnage tax.

Subject of taxation:
The subject of income tax is – according to general principles – income – regardless of the sources of income from which it was obtained. According to art. 7 par. 2 of the CIT Act, the income is the surplus of the sum of revenues over the costs of obtaining them, achieved in the tax year; if the tax deductible costs exceed the sum of revenues, the difference is a loss. If a taxpayer suffered a loss in respect of his business in a given tax year, he may reduce his income by the amount of that loss within the next five tax years, however, the amount of the deduction in one of these years may not be higher than 50% of the loss – in accordance with art . 7 par. 5. If a legal person achieves income from a share in profits or revenues are earned by foreign entities due to the so-called royalties – the subject of taxation is income.

 

Calculation of tax due:

To calculate the income tax due, the tax base should be determined – that is, the income already mentioned by the legal person (reduced by the costs of obtaining it) in a given tax year. It is possible to make some deductions – including for donations to public benefit organizations (limit 10% in relation to income), donations in banks in the amount of 20% of the canceled loans (loans) in connection with the implementation of the restructuring program or donations for religious worship up to 10% of income.

 

Tax thresholds in 2018 – Personal Income Tax* 

*Applicable to the tax residents

The amendment to the Personal Income Tax Act has left tax thresholds unchanged, however, the regulations regarding the free amount have changed. In the case of a tax scale, it affects the amount of tax paid. One of the forms of taxation of earnings is the tax scale. This provides for the tax to be paid in accordance with the two quota thresholds, to which the tax rates prescribed from the top down. In 2018, as in previous years, the applicable thresholds will be 18%. and 32 percent.

The first tax threshold, ie 18 percent applies to taxpayers whose income did not exceed PLN 85,528. After exceeding this amount, a tax of 32 percent should be paid. It is worth mentioning that according to the table below, the rate of 32 percent. it is not discharged to the tax office from the entire income, but only from parts that exceed PLN 85,528.

In this case, the tax-free amount announced in 2016 is still valid. Last year, its amount increased to PLN 6,600. Pursuant to the applicable law, the free amount in PIT for the previous year is:

– PLN 1,188 – for the tax base not exceeding PLN 6,600;
– PLN 1 188 reduced by the amount calculated according to the formula: PLN 631, PLN 98 (basis for tax calculation – PLN 6,600) – PLN 4,400, for the tax base above PLN 6,600 and not exceeding PLN 11,000;
– PLN 556, PLN 0.2 – for the basis for calculating a tax higher than PLN 11,000 and not exceeding PLN 85,528;
– PLN 556 – PLN 0.20 less the amount calculated according to the formula: 556 PLN 02 gr × (tax calculation basis – PLN 85 528) – PLN 41 472, for the tax base higher than PLN 85,528 and not exceeding PLN 127,000.

Settlements in 2019: PIT for 2018

January 1 this year A new amendment to the PIT, CIT and lump sum income tax act has come into force on some of the revenues earned by natural persons. This means an increase in the tax-free amount to PLN 8,000. How much will the amount that reduces tax in 2019 be?

PLN -1440 – for the tax base not exceeding PLN 8,000; / ‘- PLN 1,440, less the amount calculated as: PLN 883 98 gr × (tax basis – PLN 8,000) – PLN 5000, for the tax base higher than PLN 8,000 and not exceeding PLN 13,000;
– PLN 556, PLN 0.2 – for the tax base above PLN 13,000 and not exceeding PLN 85,528;
– PLN 556 – PLN 0.20 less the amount calculated according to the formula: 556 PLN 02 gr × (tax calculation basis – PLN 85 528) – PLN 41 472, for the tax base higher than PLN 85,528 and not exceeding PLN 127,000.

 

*Every person who has a place of residence in Poland must pay tax in this country on the income earned. A person who resides in Poland is a person who has a "personal and economic interest center" (eg lives, works in Poland) or stays in Poland for more than 183 days a year. Such a person is called a tax resident.

 

 

corporate income Tax in Poland

 

 

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