LITHUANIA

MAZARS IN POLAND

MAZARS AUDYT SP. z o.o.
00 - 549 Warsaw, Piękna 18, Poland

Phone:
+ 48 22 25 55 200

Mobile:
+ 48 22 25 55 299

www.mazars.pl

Kinga BARAN

Head of Tax Advisory Department
Tax Advisor

Phone:
(+48) 22 25 55 326

Mobile:
691 20 70 58

E-mail:
k.baran@mazars.pl

POLAND

Corporate tax and other direct taxes

Subject to taxation are limited liability and joint stock companies, as well as limited joint-stock partnerships (since 2014) that are Polish residents. Other partnerships are neither CIT nor PIT payers, and income generated by partnerships is directly attributed to shareholders (in proportion to their shares) and – depending on their status (companies or natural persons) – subject to CIT or PIT. CIT in Poland is payable on the income, i.e. on revenues decreased by tax-deductible costs. The standard CIT rate is 19%. Starting from 1 January 2017 there is a new 15% CIT rate for small taxpayers (whose revenue on sales in the previous year did not exceed EUR 1,200,000) and for new taxpayers in the first year of their activities. Tax-deductible costs exceeding the revenues in the given financial year constitute a loss, which may be carried forward for five years, but the deduction in a given year may not exceed 50% of the loss incurred in the previous five years. R&D tax relief allows eligible taxpayers to additionally deduct from the tax base 30% of their R&D personnel remuneration costs, as well as 20% (for SME) or 10% (for Large companies) of other R&D costs incurred. Since 2015 the CFC rules are applied in Poland. According to CFC rules a Polish CIT taxpayer has to pay tax from income generated by its CFC. A one-time depreciation write-off up to EUR 50,000 may be available for small and start-up taxpayers.

Since 2016 CbC reporting regime is introduced for multinational enterprises with consolidated income exceeding 750 million EUR. Starting from 1 January 2017 the taxpayers are obliged to prepare more extensive TP documentation.

The thin capitalization rules apply to loans granted by direct shareholders as well as to loans granted by indirect shareholders holding individually or jointly at least 25% of shares. Moreover, the thin capitalization rules are applied to loans granted by sister companies. The debt-to-equity ratio is 1:1 (formerly it was 3:1). In addition, with the exception of the general thin capitalization rules, the taxpayer has the option of applying the alternative method based on a special formula.

There is a withholding tax on dividends, interests and royalties paid by a Polish company to a foreign company. The general withholding tax (WHT) on dividends is 19%; on interest and royalties paid to non-residents it is 20% and 10%, respectively. However, the WHT rate can be reduced by double tax treaties. Poland has a wide international treaty network with approximately 90 double tax treaties. In accordance with the EU interest and royalties directive interest and royalties paid by Polish corporate residents to associated EU companies may by subject to full exemption of WHT (on certain conditions). Since 2016 a “small anti abusive clause” has been implemented for dividends related to activities whose only purpose was to gain tax benefits and which were not real.

Real property tax and transport tax are charged as local taxes in Poland. Real property tax is paid by owners of real estate.

Starting from 1 February 2016 a bank tax is introduced for banks and financial institutions. The monthly levy is 0.0366% of the total assets (exceeding indicated minimal value).

Transfer pricing in Poland
Arm’s length principle since 1997
Documentation liability since 2001
APA since 2006
Penalty
lack of documentation personal liability of the members of the Company’s Board
tax shortage 50% on tax underpayment
+ late payment interest
Related parties 25%
<
direct or indirect control
personal, family relations
Safe harbours  

Level of attention paid by Tax Authority:

10/10

VAT and other indirect taxes

The standard VAT rate is 23%. Preferential rates of 8% and5% apply to certain goods and services. Other goods and services (e.g. exports, intra-Community supplies of goods, international transport services) may be zero-rated or exempt. The options/limits based on the EU Directive and Polish VAT regulations:

Other indirect tax types in Poland are excise duty and gambling tax. Some civil acts such as contracts of sale, loan agreements, foundation deeds of partnership or company, if not subject to VAT, may be subject to civil law activity tax (CLAT), the rates of which are from 0.1% to 2%. Transactions related to filling a power of attorney and public administrative actions (submitting application forms, issuing certificates, granting permissions, etc.) are subject to stamp duty.

VAT Options in Poland Applicable / limits
Distance selling PLN 160,000 /year
(approx. EUR 40,000)
Call-off stock
VAT group registration
Cash accounting PLN 20,000/year
(approx. EUR 5,000)
Import VAT deferment
Local reverse charge supplies of scrap; paper waste; certain kind of electronics above limit of PLN 20,000 (approx. EUR 5,000)
Option for taxation
- letting of real estate
- supply of used real estate
VAT registration threshold PLN 200,000 /year
(approx. EUR 50,000)

Personal income tax / Social security system

PIT is generally calculated on the income (i.e. on revenues reduced by tax-deductible costs). However, the income calculation differs depending on the source from which the income is earned (for example, employment contract, sole traders’ activity, personally performed activities, etc.). PIT is calculated according to the progressive tax scale at the rates 18% to 32%. A specific rate applies to individuals pursuing business activities as sole proprietorships or partners in partnerships, who may opt for a flat 19% PIT rate. Due to the above flat rate, as well as other rules applicable to this type of income, the taxation of sole traders is based on similar provisions as described in the previous chapter on corporate income tax (CIT).

Active incomes fall under the scope of the SSC system: individual social contributions (capped) and other insurances equal altogether 13.71%; employer’s contributions equal altogether approximately 21%. Additionally, the individual is obligated to pay a 9% contribution to health insurance, out of which 7.75% is deductible from the tax and 1.25% from the net income. The examples below show the cost of the employer and of the employee in case of minimum wage level and the average wage in the private sector.

Wage-related taxes in Poland Minimum wage Average wage in private sector
Exchange rate PLN / EUR 4.4 in EUR in PLN in EUR in PLN
  455 2 000 965 4 245
TOTAL WAGE COST 551 121,00% 1 168 121,00%
Employer's contributions* 74 16,26% 157 16,26%
Other insurance (approx.) 22 4,74% 46 4,74%
Gross salary 420 100,00% 934 100,00%
Employees` contributions 62 13,71% 132 13,71%
Healthcare insurance 32 9,00% 75 9,00%
Personal income tax** 22 18,00% 67 18,00%
NET SALARY 304 66,78% 660 68,36%

* capped at income of PLN 127 890- over this amount only other insurance and healthcare insurance is charged
** taxable base = gross salary – employee’s contributions – statutory tax deductible costs – health insurance (tax deductible part)

 
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