Taxes in Poland

Taxes in Poland include:

• tax on personal income (income tax);
• Corporate income tax (analogous to income tax for businesses);
• Value added tax and some other payments.

Taxes

Polish taxes are established at the legislative level, therefore, evading their payment threatens with administrative liability (payment of fines). Repeated violation of tax laws or refusal to pay taxes in especially large amounts may threaten an individual with criminal prosecution. Business for non-payment of taxes can be closed.

Key points of the Polish tax system

Polish tax policy is based on the fact that each individual and legal entity must independently figure out how much and what taxes to pay. If the taxpayer pays lower tax rates due to ignorance of the information, this does not relieve him of the liability provided for by law.

However, the taxpayer can apply to the Ministry of Finance of Poland and receive an individual tax calculation within a few months. This will simplify his life and allow him to live within the framework of the law. It will also save him from possible tax overpayments.

A few more fundamental principles can be distinguished in the Polish tax system:

1. non-payment of taxes is a criminal offense for which both legal entities and individuals are punished;
2. in case of an insignificant amount of non-payment of taxes, a person may pay interest for delay;
3. A taxpayer has the option to file an application to an administrative court if he/she believes that he or she has been charged with an increased tax rate or an unfair fine.

Compliance with these principles makes the Polish tax system fair for all market participants. Timely payment of taxes is an important part of the normal functioning of the country’s economy.

Company structure and income tax

The main tax for business in Poland is corporate income tax. Its payment becomes mandatory for all legal entities doing business in Poland. This also applies to foreign companies whose owners are not residents or citizens of Poland.

The income tax rate in Poland is 19% of the income received by the company for the reporting period. Income means the net profit received by the enterprise after deducting the cost of production, production, advertising and other types of expenses. If the business is not profitable, then the company has the right to postpone the payment of taxes for five tax years.

The taxation rules for business in Poland are quite complex and include many points. Therefore, before starting a business in the country, it is recommended that individuals familiarize themselves with the types of taxes in detail, and only after that proceed with the creation of a company. This will save you from a lot of problematic moments, and will make the organization really profitable, while not violating Polish tax laws.

Investment taxation

Investments aimed at developing a business are taxed in the following order:

• The limited liability company pays a standard rate of 19% on profits (shareholder dividends are also taxed at 19%);
• Limited partnerships are subject to 19% income tax, which is withheld from partners.

Exemption from taxes in Poland is provided in one of the economic areas that are not so popular among entrepreneurs. Therefore, local authorities can encourage companies to open business in unpopular regions by reducing tax rates or not at all (on a temporary basis). So in this regard, investing in a business in Warsaw is less profitable than in local enterprises somewhere in the Polish outback.

Business financing

As for the introduction of funds into the business, the taxation is carried out as follows:

1. when raising the authorized capital of an organization, only 0.5% of stamp duty must be paid (usually 5 zł for every thousand capital increase);
2. credit investments allow you to reduce taxable income;
3. Non-equity loans include 2% stamp duty.

VAT – tax, on the supply of services and goods

Value added tax is one of the main types of taxation. Polish tax law sets a general VAT rate of 23% on the price of a good or service. Although there are categories of goods for which reduced rates of 3-8% are set. These include products of particular importance: medicines, food, books, newspapers and some other types of products and services.

Hiring employees

How much tax an employer pays in Poland – the standard rate is 18% on PLN 85,528 of profit. If this indicator is exceeded, a tax of 32% is paid. The employer is obligated to provide social security for the employee, but health insurance is the responsibility of the employee and is deducted from his individual income tax.

Income tax in Poland is paid by officially employed persons who receive wages, self-employed persons and individual entrepreneurs. Payroll taxes in Poland are 18% on profits of PLN 85,528 and 32% on the amount above this figure.

Taxes in Poland on wages are required to be paid by both Polish citizens and residents, and foreign persons officially working in this country. Taxes in Poland on wages are paid in accordance with the annual declaration of income, which is submitted before 1.05.