Poland

Individual – Taxes on personal income

Polish tax residents pay PIT on their worldwide income. Non-residents are subject to Polish PIT on their Polish-sourced income only.

Personal income tax rates

General PIT rules provide for the rates shown in the following table:

1. Income from 0 to 120,000 is liable to be taxed at a rate of 12% of the baseless amount decreasing tax (PLN 3,600)*
2. The tax-free amount is set at PLN 30,000 and was introduced as of 1 January 2022. This means that taxpayers earning less than PLN 30,000 per year will be exempt from paying taxes.
3. In the case of income exceeding PLN 120,000, the tax is PLN 10,800 + 32% of the excess over PLN 120,000. The decreasing tax amount is already included in the above sum of PLN 10,800.

Taxation of capital gains

Capital gains (including dividend and interest income) are taxed at a flat rate of 19%. The tax-free amount does not apply to this income.

Taxation of rental income

Currently, taxpayers can choose the method of taxation of rental income, i.e. taxation with a tax scale or a lump-sum tax on recorded revenues. As of 2023, the rental income will be taxed only as a lump-sum tax on recorded revenues (8.5% rate for revenues below PLN 100,000 per year and 12.5% on the surplus over PLN 100,000). This means that the total rental income will be taxed without the right to deduct costs of earning income (e.g. maintenance costs, utilities).

Special rules for non-residents

Specified types of income, if gained by non-residents, are subject to special treatment. Namely, they are taxed at a flat rate of 20% calculated on revenue (cost deductions are not allowed) unless a double tax treaty (DTT) between Poland and the individual’s country of residence provides otherwise.

Corporate – Taxes on corporate income

The CIT is the tax levied on corporate income. The standard CIT rate is 19%.

The reduced CIT rate of 9% can be applied for income, other than capital gains, if the taxpayer:

1. is a small taxpayer (i.e. taxpayer whose value of sales revenue, including the amount of VAT due, did not exceed the amount corresponding to the PLN equivalent of EUR 2 million, in the previous fiscal year) or
2. 1,5 started its business activity, provided the establishment of the company was not a result of transformation or merger (in the first tax year).

The lower rate does not apply to tax capital groups nor companies created as a result of certain restructuring operations (mergers, the contribution of a going concern, etc.).

Polish tax residents are subject to tax on their worldwide income unless there is an applicable double tax treaty in place between Poland and the relevant country that provides that the foreign income shall be exempt from taxation in Poland. Non-residents are taxed only on their Polish-sourced income. Double tax treaties concluded by Poland may result in specific income not taxable in Poland irrespective of its source.

Minimum income tax

Income Tax is a new tax obligation that applies to taxpayers declaring tax losses or negligible income (=<2% of the revenue).

The regulations are postponed until the end of 2023. As a result, the minimum tax will be applicable from 1 January 2024, and the first payment will occur in 2025.

The minimum income tax rate is 10%.

The tax base is to be the sum of the following:

1. 5% of operational revenues (other than from capital gains), plus
2. “excessive” debt financing costs paid to related entities (generally debt financing costs exceeding 30% of the so-called tax EBITDA), plus
3. costs of intangible services or royalties paid to related entities – exceeding PLN 3 million plus 5% of the so-called tax EBITDA.

It is possible to choose an alternative method of determining the tax base amounting to 3% of the value of revenues other than from capital gains in the tax year.

Local income taxes

There are no provincial or local income taxes in Poland.