Corporate Income Tax in Poland
Taxpayers of CIT are legal persons (e.g. limited liability companies, joint-stock companies, state enterprises, cooperatives), entities (organizational units) without legal personality except for partnerships, companies “under construction”, tax capital groups. Polish-resident entities are taxed on their worldwide income (unlimited tax liability), whereas non-residents only on the Polish-source income (limited tax liability). An entity is regarded resident if its legal seat or center of management is located in Poland. Moreover, foreign (non-resident) partnerships are taxable if under their domestic tax law they are treated as legal persons. Investment and pension funds are exempted from corporate income tax.
Taxable object is income of all types (also capital gains), except for excluded and exempted income. CITA does not cover e.g. income (revenue) derived from activities which may not constitute an object of legally binding contact (illegal drugs dealing), from most agricultural activities (with the exception of so-called special sectors of agricultural production) and forestry activities, as well as income (revenue) subjected to tonnage tax. Exempted income encompasses among others (usually under further conditions): some subsidies received from the State or units of self-government or from foreign (e.g. EU) assistance programs, income of public benefit organizations used for the purposes of their statutory activities, income of taxpayers whose statutory purposes include scientific, educational, cultural, health protection or social welfare activities used for that purposes.
Income is the excess of the sum of revenues (i.e. gross income) over tax deductible costs generated in a tax year (a calendar year or a period of 12 consecutive months adopted by taxpayer). Revenues include inter alia: received cash or cash-equivalent payments, including foreign exchange gains, the value of received free of charge or partly free of charge tangibles, intangibles and other performances, the value of remitted or time-lapsed debts. Deductible costs are expenses incurred for the purpose of earning taxable income, retaining or assuring the source of income, except for costs expressly listed as non-deductible (penalties, representation expenses including purchase of gastronomic services, foodstuffs and beverages, especially alcoholic). If deductible costs exceed the revenues – a loss is generated. Loss may be deducted from income attained during 5 following years (up to 50 % per a year).
Taxable amount is income (i.e. net income), reduced by deductions provided for by the law. Deductions include e.g. donations to public benefit organizations and for the purposes of religious cult up to a limit of 10 % of income, expenses for purchase of new technologies.
CIT is imposed on the total income from all sources (reduced by deductions) at the rate of 19%. However, dividends are taxed separately (withholding tax of 19 %). Exempted are dividends paid by resident subsidiaries to parent companies owning at least 15 % of the subsidiary’s share capital continuously for at least 2 years and being subjected to unlimited income tax liability in Poland, other EU Member State or other state belonging to EEA.
Corporate income tax is levied on a yearly basis, but monthly advance payments must be made (by the 20th of the following month). Advance payments are deducted from the annual tax. Quarterly advance payments are available to small-taxpayers (with annual sale revenues not exceeding 800000 EUR) and taxpayers beginning their activities. Final annual tax must be paid and annual tax return filed by the end of the third month of following tax year.
Malgorzata Sek
Foundation Centre of Tax Documentation and Studies in Lodz
