Taxation in Poland
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Taxation in Poland
You will pay tax on your income as an earner or as a self-employed person. As a permanent resident of Poland, you will be calculated on your income in Poland and abroad. A foreign resident who is employed in Poland pays tax only on their income earned in Poland.
You will be classed as a Polish resident if you are based in Poland, or if you stay there for more than 183 days in a fiscal year. An employer is obligated to deduct the tax payable on an employees' salaries. A self-employed person must prepay income tax that will be offset on filing an annual return. The advance payment is determined on the basis of the return made for the previous year. In the event of a new business, the advance will be calculated on the basis of estimates made by the owner of the business.
What follows is a list of the income tax bands:
Up to PLN 3,091 0%
PLN 3,091 - PLN 85,528 18% minus PLN 556.02
Over PLN 85,528 PLN 14,839.02 + 32% of surplus over PLN 85,528
Poland's corporate tax is 19%.
Tax incentives are the most commonly offered incentives in Poland. There are two groups of such incentives:
Corporate income tax exemption
Local tax exemption
Corporate income tax exemptions are accessible in special economic zones. When investment is made at a level of at least EUR 100,000, exemption from corporate income tax (CIT) on income generated from business activity conducted in special economic zones is offered. Local tax exemptions are exemptions from real estate tax.
Investors operating in special zones are offered various incentives and tax breaks. The most important ones include a partial or a complete exemption from corporate income tax on revenue coming from business operations carried out in a given zone, and counting some part of investment expenses as an income-generating cost.
An investor has to obtain a permit for conducting business operations in a zone and must first meet its criteria. The warrant is granted by the zone's management through a tender or through negotiations undertaken on the foundation of a public invitation. Such a warrant specifies the field of operation, the size of the investment, and future employment.
Procedures for acquiring a permit can differ from one zone to another. The common steps, however, will involve the following:
You contact the zone management, and collect information on investment terms and conditions and available locations
Visit the zone and contemplate possible locations
Submit a letter of intent and/or initial application/offer
The zone management will analyse and evaluates the offer
Further negotiations or consultations, if needed
The zone's management announces a tender concerning the permit and finalises its terms of reference
The tender procedure takes place, you purchase the terms of reference, pay the tender deposit and submit tenders, which are subsequently opened and evaluated by the tender commission and the winning bidder is selected
Management grants the permit to the winning bidder
Permits are not warranted and public assistance is not offered for some types of business activity. These include:
Manufacturing of explosives
Production of tobacco products
Bottling and processing of spirits and other alcoholic beverages
Processing of engine fuel
Running game centres
Offering services connected with the installation, repair, or maintenance of machinery and equipment used to carry out business operations in the zone
Certain types of construction services
Services connected with retail and wholesale trade
Repair of motor vehicles and household and personal-use articles
Hotel and catering services
Financial mediation services
Services connected with real estate, renting, education and business operations
Services in the area of public administration
Obligatory social insurance
Health care and social welfare
Some licensed business activities
Assistance in these zone's is provided in the form of tax exemptions.
VAT in Poland
VAT in Poland is 23% with a reduced rate of 8%