The Polish tax system registered an accelerated development in the past 25 years. This decision taken by the Polish government was taken with the purpose to encourage foreign investments and increase the employment rate. Among the measures taken to reach this objective, Poland has reduced the income tax from 40% to 19% reaching an indicator among the 5 lowest in Central and Eastern Europe.
Corporate tax in Poland
The corporate tax in Poland
is one of the lowest in Europe, being rated at 19%. Partnerships are not subject to corporate income tax in Poland.
Companies that must pay these taxes are the following:
• corporations in formation;
• tax capital groups;
• limited liability companies, joint-stock companies and other legal entities;
• organizational units without legal personality except for companies without legal personality;
• companies without legal personality with offices or management boards in another state.
VAT in Poland
The standard Polish VAT rate
is 23% since 2011. As in many other countries, Poland also applies VAT exemptions for various services like postal and financial ones, and also reduced rates of 8% and 5% for certain food, books, newspapers and others. However, contributors have the possibility to apply for VAT refund by submitting an application to the Tax Authorities.
Dividend tax in Poland
The Polish dividend tax is 19%. However there are cases when dividends received by a company resident in the European Union are exempted.
Incentives for foreign investors in Poland
Entrepreneurs that decide to invest in Poland
can choose the Special Economic Zones (SEZ)
. These are specific areas where the Polish government has implemented programs meant to attract foreign investors and increase the region economic development. Basically SEZ represent the result of successful connections between the needs of these regions and the wishes and needs of foreign investors. Therefore, a new company with foreign capital can benefit from income tax and local taxes exemptions, employee training, and financial grants for new investments and for the creation of new jobs. The respective company must receive a permission to begin trading in an SEZ from the management board of each zone and can also receive assistance related to the investment process
Other Taxes in Poland
The withholding tax on interests and royalties was established at 20% unless the company can take advantage from the benefits double tax treaties signed by Poland
. For branches it is not required to pay a remittance tax. For sea and air transportation services companies must pay a fax in quantum of 10%.
For more information related to taxes in Poland please contact our law firm in Poland.