Taxation and investment in Poland Reach, relevance and reliability - Deloitte
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Taxation and investment in Poland Reach, relevance and reliability 2021
Brochure / report title goes here |
Section title goes here
Contents
1. Investment climate 4 4. Taxation of companies 16
1.1 Business environment 4 4.1 Overview 16
1.2 Currency 5 4.2 Taxation of non-residents 16
1.3 Banking and financing 5 4.3 Taxable income 17
1.4 Foreign investment 5 4.4 Deductions 17
1.5 Tax incentives 5 4.5 Exchange differences 18
1.6 Exchange controls 5 4.6 Tax incentives 18
4.7 Controlled Foreign Corporation (CFC) 18
2. Setting up a business 6 4.8 Rate 19
2.1 Principal forms of business entities 6 4.9 Corporate reorganizations 19
2.2 Regulation of business 8 4.10 General Anti-avoidance Rules (GAAR) 19
2.3 Accounting, filing and auditing requirements 9 4.11 Special anti-avoidance rule (SAAR) 19
2.4 Practices limiting competition 9 4.12 Dedicated anti-optimization regulations 19
2.5 Practices unfairly using a contractual 4.13 The white list & split payment – CIT
advantage 11 consequences 20
4.14 Counteraction of payment backlogs 20
3. Tax system 12 4.15 Taxation of limited partnerships 20
3.1 Principal taxes 12
3.2 Basic legislation 12 5. Related party transactions 21
3.3 Administration 12 5.1 Transfer pricing 21
3.4 Double taxation relief 14
3.5 Mandatory reporting of tax-planning schemes 6. Taxation of individuals 24
(Mandatory Disclosure Rules – MDR) 15
6.1 Residence 25
3.6 Hybrid structures 15
6.2 Taxable income 25
6.3 Deductions and reliefs 25
6.4 Personal income tax rates 25
6.5 Statutory costs 26
6.6 Social insurance contributions 26
6.7 Inheritance and gift tax 27
6.8 Net worth/wealth tax 27
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Brochure / report title goes here |
Section title goes here
7. Personal income tax charged on foreign 10. Value added tax 36
individuals 28
10.1 General 36
7.1 General tax rules 28
10.2 Taxable supply 36
7.2 Tax residency 29
10.3 Rate 36
7.3 Legal basis for the right to work in Poland 29
10.4 Registration 36
10.5 VAT grouping 37
8. Withholding taxes 31
10.6 Compliance 37
8.1 New rules regarding mechanism
10.7 Obligatory split payment mechanism 39
of collecting WHT 31
10.8 Application to non-residents 40
8.2 Beneficial owner clause 31
10.9 VAT treatment of vouchers 40
8.3 Dividends 32
10.10 White list of taxpayers 40
8.4 Interest 32
10.11 Online cash registers 41
8.5 Royalties and service fees 32
10.12 Quick fixes (changes regarding settlement
8.6 Certificates of residence 32
of cross-border transactions of goods) 41
10.13 SLIM VAT – package of changes
9. Assessment, payment and appeals 33 to the Polish VAT Act 42
9.1 Tax year 33 10.14 E-commerce package 42
9.2 Returns 33
9.3 Payment of tax 34 11. RET 44
9.4 Tax strategy 34
9.5 Appeals 34 12. Other Taxes 46
9.6 Tax audits 34 12.1 Capital tax 46
9.7 Penalties and interest 35 12.2 Transfer tax 46
12.3 Tax on buildings subject to rent / lease 46
12.4 Exit tax 46
12.5 Stamp duty 47
12.6 Miscellaneous taxes 47
12.7. Jednolity Plik Kontrolny (Single Control File) 48
13. Office locations 50
14. Contacts 51
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
1. Investment climate
1.1 Business environment
Poland is a parliamentary democracy with Quick facts
a bicameral legislature. Legislative power is
Capital Warsaw
vested in a bicameral Parliament, composed
of the Sejm (lower house) and the Senate Population 38 434 000
(upper house); executive power is vested in
Language Polish
the President and the Council of Ministers,
while judicial power is vested in courts Currency Polish zloty (PLN)
and tribunals. Poland is a member of the
European Union (EU), the European Economic Time GMT +1
Area (EEA), the World Trade Organization and
Membership EU, EEA, OECD, WTO
the Organization for Economic Co-operation
and Development (OECD). As an EU member
state, Poland is required to comply with
all EU directives and regulations. Poland’s
main imports are machinery and transport
equipment, manufactured goods (particularly The privatization of small- and medium-sized state-
consumer electronics), chemicals and mineral
fuels. The major trading partners include EU
owned enterprises and a liberal law on establishing
countries, China, Turkey as well as Russia new firms have encouraged development of the private
and Ukraine. Poland has pursued a policy
of economic liberalization. The privatization
business sector.
of small- and medium-sized state-owned
enterprises and a liberal law on establishing
new firms have encouraged development of
the private business sector.
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
1.2 Currency maintain their own bank account(s). Permits Also, investors that create or develop
The national currency is the Polish zloty are required for certain types of business acquired IPs under performed R&D actives
(PLN). Poland expects to become a member activities such as for example: mining and commercialize them, as of January 1st,
of the European Monetary Union in or after operations, defense related industries, fuel or 2019 may benefit from the reduced CIT rate
2020 and possibly will adopt the euro as its energy operations, security services involving of 5% applied for the income generated from
currency on that date. The date of accession individual property, casino business, airing such IPs (so called IP Box).
to the Monetary Union is yet to be decided radio and television channels and aviation
due to economic uncertainty. services. Customs bonded warehouses are storage
facilities for goods that are not subject to
1.3 Banking and financing 1.5 Tax incentives either customs duty or the rules that apply
The banking system in Poland comprises Various activities, ranging from environmental to imported/ exported products during the
the central bank called the National Bank of protection projects to development of storage period. A bonded warehouse can
Poland (the central bank or NBP), as well as human resources, can be supported by be open to the general public or private
commercial, retail, foreign and investment EU and national funds. Consequently, it is entities provided that certain requirements
banks. Banking activities are supervised by possible for business operations in various are met. Duty-free zones are separate parts
the Polish Financial Supervision Authority. sectors of the economy to receive EU and of the EU Customs Zones in which goods
The NBP is the exclusive issuing institution / or national financing even from several are treated by the customs authorities as
of the Polish zloty and it has the exclusive different programs or funds. The level of if they remained outside the zone. Both
right to set and implement the monetary co-financing varies, depending on the type of Community and non- Community goods may
policy. Commercial banks dominate the business activity, the level of permitted public enter the zones. Several duty-free zones have
industry, holding around 95% of all the aid and size of entity applying for support. been established in Poland and are situated
banking sector assets (with co-operative primarily on the main communication routes
banks holding the rest). In addition to banks, Starting from September 2018 new (e.g. airports and border crossings). Duty-
other important financial institutions are programme supporting entrepreneurs that free goods are only available to travelers
insurance companies, pension funds, mutual carry out new investment projects (covering departing to non-EU countries.
funds, venture capital funds and leasing both the manufacturing business as well
companies. Foreign financial companies, as modern services for the business) was 1.6 Exchange controls
primarily insurers, play an important role in implemented replacing Special Economic Polish foreign exchange rules are
these sectors. Zones programme. All entrepreneurs harmonized with EU legal standards, and
(domestic and foreign) can receive decision there are no limits on capital flows between
1.4 Foreign investment on support in a form of exemption from Poland, the EEA and OECD member
Poland’s market size and membership in the income tax - similarly as in case of Special countries. There are no exchange controls
OECD and the EU have made it attractive Economic Zones - but regardless of the on inward or outward investment. The
to foreign investors. Business operations location of the investment project within the Polish zloty (PLN) is fully convertible and
are regulated in particular by the Code of territory of Poland. may be used for settlement of international
Commercial Companies, the Entrepreneurs’ transactions. Nevertheless, entities
Law and the Act on the Rules of Participation As of October 2019, under updated transferring the zloty and foreign currencies
of Foreign Entrepreneurs and Other Foreign “Supporting investment of significant to and from Poland must submit detailed
Entities in the Business Transactions on the importance for the Polish economy in quarterly reports of their transactions for
Territory of the Republic of Poland. These 2011 – 2030” (Polish Government Grant) statistical purposes. The NBP monitors flows,
laws cover most forms of economic activity cash support will granted for investment in but the Council of Ministers sets thresholds
and have enhanced the attractiveness of the production sector and creating new jobs in and reporting procedures. The Ministry of
Polish market by reducing some of the legal service sector. The grant amount may be Finance supervises all foreign exchange
obstacles facing foreign investors. Foreign increased if training is offered to employees. activities, and banks must submit information
investors may be defined as corporations Grants are also available for companies about customer accounts at the Ministry’s
with head offices registered abroad, investing in R&D infrastructure and / or request.
business associations established by foreign carrying out R&D project or implementing
individuals or companies operating under the results of R&D activities. R&D related
the laws of a foreign country and individuals operational costs can be also eligible for R&D
domiciled abroad. Except for a few minor tax deduction allowing to deduct additional
restrictions, foreign investors enjoy the same 100% of costs from tax base.
treatment as domestic entities and may apply
for permits to engage in restricted activities
if they are permanent residents originating
from countries applying the reciprocity rule
to Polish companies. All legal entities have to
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
2. Setting up
a business
2.1 Principal forms of business entities allowed by the law, but they are primarily Capital: The minimum capital required to
The following types of companies operate used as special purpose vehicles, holding establish a limited liability company is PLN
in Poland: a joint-stock company (spółka companies and as national operating 5,000 to be paid up before the registration.
akcyjna – SA), a limited liability company companies controlled by international Contributions to a limited liability company
(spółka z ograniczoną odpowiedzialnością – corporations. It has a separate legal may be made in cash or in kind.
sp. z o.o.), a limited joint-stock partnership, a personality from its shareholders, which
registered partnership, a limited partnership means that when acting through its Legal reserve: There are no legal reserve
and a professional partnership. In addition, governing bodies, it can acquire rights and requirements for a limited liability company.
new company type - a simple joint-stock incur liabilities on its own behalf.
company (prosta spółka akcyjna – PSA) will Shares: Shares are registered and may be
be incorporated to the Polish law on 1 March The sp. z o.o. has a capital, which is created common or preferred. The minimum share
2021. Creation of a European company (SE) is from shareholders’ contributions, but value is PLN 50. The shares do not constitute
allowed in Poland. An individual can also carry shareholders of the sp. z o.o. are generally securities.
on business as a sole proprietor. Limited not responsible for the liabilities of the
liability companies, registered partnerships company. The management of the sp z o.o. Management: The main corporate bodies
and limited partnerships (in the future also is less formal than that of the SA, so it is a of the sp. z o.o. are the shareholders’ meeting
simple joint-stock company) may be formed somewhat more popular form of conducting and the management board. There are no
and registered online by using templates business. residence requirements for the management
of partnership/ company agreements or board members of the sp. z o. o., however
traditionally. Formation a work permit may be required from a
Founders: There are no restrictions on foreigner. The term of office for management
Forms of entities the number, nationality or residence of board members is generally defined as one
Limited liability company (sp. z o.o.) shareholders; however, a limited liability year, but can be easily modified or revoked
The sp. z o.o. is the basic legal form of company may not be formed solely by altogether in the company’s articles of
a company in Poland. Limited liability another single shareholder of a limited association.
companies may be used for any purpose liability company (or its foreign equivalent).
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
Supervision: The rights of control are vested Joint-stock company (SA) Management: The corporate bodies of a
in each shareholder of the sp. z o.o. and may The SA also has a personality separate from joint-stock company are the shareholders’
be limited only when a supervisory board its shareholders, which means that when meeting, the management board and the
or an audit committee is established. If the acting through its governing bodies, it can supervisory board. Management of the SA is
share capital exceeds PLN 500,000 and there acquire rights and incur liabilities on its own vested in a management board. There are no
are more than 25 shareholders, the company behalf. residence requirements for the management
has to have a supervisory board composed board members of the SA, however, in case
of at least three persons. The SA has a capital created by shareholder of foreigners a work permit may be required.
contributions. As in the case of a limited However, in the financial sector, in particular
Meetings and votes: An absolute majority is liability company, the shareholders of the in case of Polish registered banks, at least
generally sufficient to pass most resolutions, SA are generally not responsible for the two members of the management board,
but articles of association can regulate this company’s liabilities. Management is more including the chairman, must have working
issue otherwise; a 2/3 or 3/4 majority is formal than in the case of the sp. z o.o. This knowledge of the Polish language. Members
required for major changes. type of company is frequently used where of the management board may be appointed
this form is required by law (e.g. banks, for a term of office of up to five years.
Costs of incorporation: Legal costs for insurance companies) or where the company
establishing a company (including notary is planning floatation on capital markets. Supervisory: The SA has to have a
charges, stamp duty and court costs) depend, supervisory board consisting of at least three
inter alia, on the level of capital. Formation members (five in listed companies), each
Founders: A joint-stock company must appointed for a term of up to five years. The
Registration: A limited liability company be founded by at least one individual or supervisory board exercises permanent
acquires legal personality as a result legal person who must sign the articles of supervision over all areas of the activities of
of its registration in the National Court association. The SA may not be formed solely the SA.
Register. However, it comes into existence by a single shareholder constituting a limited
as a company in organization (and is able liability company or its foreign equivalent. Meetings and votes: An absolute majority is
of contracting) at the time its articles of There are no residence or nationality generally sufficient to approve most actions,
association are signed. requirements. but articles of association can regulate this
issue otherwise; a 75% majority or other
Online registration: A limited liability Capital: The minimum initial capital for a majority is required for major changes.
company may be formed and registered joint-stock company is PLN 100,000. The
online by using a template of the articles shares subscribed for in-kind contributions Costs of incorporation: Legal costs for
of association. The main advantage of have to be paid in full not later than before establishing a company (including notary
this solution is that the registration takes the end of one year of registration of charges, stamp duty and court costs) depend,
significantly less time (usually a few days). the company. The shares subscribed for inter alia, on the level of capital.
On the other hand, the founders have less cash contributions shall be paid prior to
flexibility with regard to shaping the articles of registration of the company to the extent of Registration: The SA comes into existence
association and all of the contributions have at least one fourth of their nominal value. as a company in organization when all of its
to be made in cash. shares are subscribed for. As in case of sp.
Legal reserve: The SA is required to set up z o.o., it obtains legal personality when it is
Online activities: If the limited liability a legal reserve (supplementary capital) equal entered into the National Court Register.
company has been registered online, certain to 8% of annual net profits, until the reserve
activities of a limited liability company (like for reaches one-third of the share capital.
instance amending the company’s articles of
association) may be carried out online, which Shares: Shares may be registered or beared,
saves time and costs. common or preferred. Nondividend shares
are not permitted. The minimum share value
is PLN 0.01. Shares constitute securities and
may be issued to the public. From 1 March
2021, all shares in SA must be registered
digitally and cannot be issued in the form of a
paper document.
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
Branch of a foreign company
A foreign company may opt to set up a
branch in Poland. Foreign investors from
the EU, member states of EFTA parties to
EEA agreement as well as other foreign
companies from outside the EEA which may
enjoy freedom of economic activity on the
basis of agreements concluded with the
EU or EU member states are authorized to
conduct business activities under the same
rules that apply to Polish enterprises. A
branch is a part of a foreign company that
does not have its own legal personality, but
conducts business in Poland. A branch may
only conduct activities within the scope of
business activities of the foreign investor.
A branch is allowed to generate income. It
has to be registered in the National Court
Register under the name of the investor and
the name has to include the phrase “branch
in Poland”.
Foreign investors also may establish to the merger has subsidiaries, distribution within ninety business days. However, the
a representative office in Poland. A networks or permanent sales practices in Commission can decide to refer the merger
representative office may only carry out Poland. Certain mergers and acquisitions at to the competition authority of the respective
promotional and advertising activities. the level of the European Community are member state to determine whether the
Representative offices may not generate subject to EU merger control. As a rule, the effect of the merger will primarily be in such
income on their own behalf. A representative European Commission has exclusive powers member state. That decision counts as
office is registered in the Register of to review such transactions. Under its Merger official notification of the government of the
the Representative Offices of Foreign Control Regulation, the EU has jurisdiction member state.
Entrepreneurs kept by the Ministry of over mergers where the combined aggregate
Economy. worldwide turnover of all the undertakings Companies whose merger would not
concerned exceeds EUR 5 billion and the normally fall within the jurisdiction of the
2.2 Regulation of business aggregate EU-wide turnover of each of at European Commission can request a
least two of the undertakings exceeds EUR Commission review if they are otherwise
Mergers and acquisitions 250 million, unless each of the undertakings obliged to notify three or more member
The Act on Competition and Consumer concerned achieves more than two-thirds states. The Commission proceeds as a
Protection empowers the Office for the of its aggregate EU-wide turnover in a single “one-stop shop” only if none of the relevant
Protection of Competition and Consumers member state; and where the aggregate member states objects within 15 business
(UOKiK) to block a merger that would lead global turnover of the companies concerned days.
to creation or strengthening of a dominant exceeds EUR 2.5 billion for all businesses
position on the market. The UOKiK also involved, aggregate global turnover in each
imposes reporting requirements for of at least three member states exceeds
acquisitions of existing entities. Parties to a EUR 100 million, aggregate turnover in
proposed merger have to notify the UOKiK each of these three member states of at
whether their combined turnover for the least two undertakings exceeds EUR 25
previous year exceeded either EUR 1 billion million and aggregate EU-wide turnover
worldwide or EUR 50 million in Poland. There of each of at least two of the undertakings
are exceptions, such as for example when exceeds EUR 100 million, unless each of the
the transaction is within the same capital or undertakings concerned achieves more than
financial group and when the concentration two-thirds of its aggregate EU-wide turnover
results from bankruptcy proceedings or within one member state. The European
taking over local business with an annual Commission has twenty five business days
turnover not exceeding EUR 10 million. All after a merger is reported to approve the
international companies have to notify the transaction or open a procedure. If it decides
UOKiK of a proposed merger if any party to open a procedure, it has to issue a ruling
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
2.3 Accounting, filing and auditing the following three conditions were met in Evaluation in the context of the
requirements the preceding financial year: abovementioned provisions also covers
The Polish accounting standards generally do behavior undertaken unilaterally by
• Average annual employment (calculated
not differ significantly from the international significant market participants, which may
as a full-time equivalent) of at least 50
standards in respect of assets and liabilities potentially affect other participants (for
persons;
presentation and methods of valuation. All example forcing sales at understated prices
companies listed on the regulated markets • Total net annual turnover and financial or refusal to cooperate).
of any European Economic Area country income from the sale of goods and
must prepare their consolidated financial services and financial transactions of at The abovementioned behaviors, if they
statements in accordance with IFRS. All least PLN equivalent of EUR 5 million; violate the Act on competition and consumer
accounting documentation, records and protection, expose not only the entrepreneur
• Total balance sheet assets as at the end
reports must be prepared in Polish language himself, but also persons managing the
of the accounting year of at least PLN
and Polish currency. Companies must apply company at the maximum penalty risk (in
equivalent of EUR 2.5 million.
the accounting principles specified in the the case of an entrepreneur) of 10% of
Accounting Act to ensure the true and fair turnover generated in the year preceding the
Together with the annual financial
presentation of their economic and financial penalty imposition. In addition, cooperation
statements, the management must prepare
position, as well as their financial results. in tenders, if it exceeds the scope allowed by
a report on the company’s activities, which
the Act, may result in (obligatory) exclusion
contains in particular of information on
Activities (including business transactions) from subsequent public procurement
major events that are material to the
must be entered into the accounting records procedures.
company’s activities, the company’s expected
and disclosed in the financial statements
development and major achievements in
according to the nature of the business. From the point of view of compliance of
the area of R&D, as well as the company’s
the entrepreneur’s activities with the law,
present financial condition and projections.
The annual financial statements should be as well as to protect his financial interests,
prepared no later than within 3 months from it is important to assess his business in the
All companies must prepare annual financial
the balance sheet date and approved by the context of the provisions of the Act.
statements in XML file, sign it electronically
shareholders at the Annual General Meeting
and submit below documents to the National
within 6 months. In addition, having regard to the authority
Court Register within 15 days from the
frequently used by the President of the Office
approval:
The scope of information disclosed in the of Competition and Consumer Protection to
financial statements is determined in the • annual financial statement, conduct searches of entrepreneurs, the level
annexes of the Accounting Act (depending of intervention of this tool in business activity
• report on the company’s activities,
on the type and size of the entity). In general, and high financial penalties for failure to
accurate annual financial statements should • resolution of financial statement approval cooperate with representatives of the Office
be prepared in electronic form and consist of and profit distribution/loss coverage, of Competition and Consumer Protection
a balance sheet, a profit and loss account, as within their framework, both entrepreneurs
• auditor’s report (if applicable)
well as supplementary information including and its representatives and employees,
introduction and explanations. Companies appropriate preparation of the organization
2.4 Practices limiting competition
audited in a given year must also present a and its members in this respect may lead
Any cooperation with other entrepreneurs,
cash flow statement as well as a statement of to the reduction of risks resulting from both
both competitors (including e.g. within
changes in the company’s equity. However, the wrong action of the entrepreneur in the
industry associations, created purchasing
it is worth mentioning that both micro and search and the possible allegation of applying
groups, cooperation in tenders), as well as
small entities have the right to use some competition-restricting practices.
suppliers (including those undertaken as
simplifications for preparation of the financial
part of ongoing cooperation) and recipients
statements, therefore, they may opt limit the
of products or services (e.g. the distribution
scope of presented information.
network created by the entrepreneur) is
subject to evaluation in the context of the
Financial statements of certain entities,
provisions of the Act on competition and
including joint-stock companies, IFRS financial
consumer protection. For this evaluation,
statements, banks, insurers, investments
it is irrelevant whether this cooperation is
and pension funds, must be audited. Other
undertaken within existing formal structures
companies must be audited if at least two of
or informally.
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Taxation and investment in Poland 2021 | Reach, relevance and reliability
Agreements restricting competition in the tender can potentially be considered The dominant entity is, for example, an
The Act on competition and consumer prohibited cooperation in the context of the entrepreneur who is the only one possessing
protection authorizes the President of above-mentioned act. the right or resource necessary to conduct
the Office of Competition and Consumer a specific activity on the market (e.g. has a
Protection to evaluate cooperation Non-formal cooperation may also be telecommunications network, a patent or
undertaken by entrepreneurs. It is prohibited considered illegal by the President of the proprietary property right). Those interested
in the light of this law to cooperate with the Office of Competition and Consumer in gaining access to this kind of resource
purpose or effect of elimination, restriction Protection, including information exchange, or right are on the one hand forced to
or distortion in other way of the competition including one-sided information sharing – cooperate with such an entrepreneur (they
on a relevant market, if the effects occur or where confidential (sensitive) information is are not able to buy from another supplier) on
may occur on the territory of the Republic of disclosed by only one entrepreneur. the conditions imposed by him.
Poland.
Due to the violation of the statutory At the same time, it is not forbidden to have
Potentially, the President of the Office of prohibition, anti-competitive cooperation a dominant position, but to abuse it, which
Competition and Consumer Protection is of the entrepreneur may result in a penalty should be identified as an action that would
entitled to evaluate not only the cooperation of up to 10% of the turnover realized in the not be possible under market competition.
undertaken by entrepreneurs operating in year preceding the year in which the decision An abuse of a dominant position can be, for
Poland, but also the one that is implemented was issued. The Act on competition and example, a refusal to sell or a sale/purchase
outside its borders, causing (potentially) consumer protection also provides for liability at excessively high or excessively low prices.
effects in Poland. for violation of its provisions of the persons Both the dominant position and its abuse
The subject of interest of the President of managing the entrepreneur. The President may refer to entrepreneurs operating on
the Office of Competition and Consumer of the Office of Competition and Consumer supply (where the dominant sells), and
Protection covers all forms of cooperation Protection may impose penalties of up to demand (where it purchases) the market
of entrepreneurs – undertaken both in the PLN 2 million on these persons. side.
vertical relationship, e.g. when cooperating
entrepreneurs are in the supplier-customer In addition, it should be noted in the context Entrepreneur’s behavior classified as an
relationship, horizontal, in the case of which of possible cooperation in tenders that abuse of a dominant position is punishable
market competitors cooperate with each recognition of this type of cooperation as by a penalty of up to 10% of turnover realized
other, as well as mixed cooperation. violating statutory prohibitions might result in the year preceding the year of the decision.
in exclusion of the entrepreneur from
As far as vertical and mixed cooperation of subsequent procurement procedures within
entrepreneurs is concerned, especially the three years of its adoption.
The Act on competition
President of the Office of Competition and
Consumer Protection undertakes activities Abuse of dominant position and consumer protection
whose subject is the assessment of operating In the light of the provisions of the
authorizes the President of
distribution systems, including those based abovementioned Act, it is also forbidden to
on franchise agreements. These systems abuse the dominant market position of the the Office of Competition
are often based in particular on agreements entrepreneur. The President of the Office of
and Consumer Protection
made within their framework in the range Competition and Consumer Protection also
of applied prices (resale prices) and areas performs an assessment in this regard. to evaluate cooperation
of operation (division of the market or
undertaken by
customers) of involved entrepreneurs. Domination position is understood by the
Act as the position of an undertaking that entrepreneurs.
In the case of horizontal cooperation, in enables it to prevent effective competition
addition to the above-mentioned issues being maintained in a relevant market by
related to prices used in the market or area giving it the power to act to an appreciable
of activity, attention should also be paid extent independently of its competitors,
to possible cooperation of competitors customers and consumers; it is assumed that
(also potential) within the so-called tender an undertaking has dominant position where
proceedings. The practice of the Office of its market share in a relevant market exceeds
Competition and Consumer Protection 40 per cent.
indicates that a situation where an
entrepreneur deciding to participate in the
tender decides to prepare a subcontract
(partial) for another bidder or in agreement
with a competitor decides not to participate
10Taxation and investment in Poland 2021 | Reach, relevance and reliability
Search by the President of the Office of
Competition and Consumer Protection
In the context of the aforementioned powers
of the President of the Office of Competition
and Consumer Protection to assess the
activities and behavior of entrepreneurs,
one should pay attention to the authority
of the Office to undertake a search of
entrepreneurs. As part of the search, the
employees of the Office of Competition
and Consumer Protection not only look
for material evidence, but also receive
explanations from both the entrepreneur
and its employees, and search the IT systems
and obtain evidence in electronic form.
Improper cooperation of the entrepreneur
in the course of the search by the President
of the Office of Competition and Consumer
Protection is punishable with a fine of up
to EUR 50 million. Persons representing
the company and its employees are also
threatened with the penalty. In this case, the The President of the Office of Competition
Improper cooperation
maximum penalty is equivalent to 50 times and Consumer Protection acting in public
the average remuneration, i.e. at the level of interest is entitled to intervene in cases of the entrepreneur in
over PLN 250,000. It should be emphasized of practices unfairly using a contractual
the course of the search
that for the abovementioned penalties, advantage taken by buyers of agricultural or
it is irrelevant whether any irregularities food products or suppliers of these products, by the President of the
ultimately influenced the course and if this use causes or may cause effects on
Office of Competition and
“success” of the search. the territory of the Republic of Poland.
Therefore, potentially, in the case of purchase Consumer Protection is
2.5 Practices unfairly using / sale of agricultural or food products from
punishable with a fine of
a contractual advantage a weaker (economically) / smaller market
If an entrepreneur, including a processing participant, the entrepreneur is exposed to up to EUR 50 million.
plant or a retailer purchases agricultural the accusation of using prohibited practices.
or food products or disposes them by
contracting with a smaller (economically The Act does not provide the definition
weaker) entrepreneur, potentially exposes of a practice unfairly using a contractual
himself to a charge of using the contractual advantage, nor a closed catalog of such. As
advantage and, as a consequence, a financial a result, the risk of a potential intervention
penalty of up to 3% of turnover achieved in by the President of the Office of Competition
the year preceding the year of imposition. and Consumer Protection in a situation
where the contractor of a stronger supplier/
From the perspective of an entrepreneur recipient requests to exercise his rights, citing
operating in the agriculture & food sector, the dishonesty of the contractor’s actions,
and taking into account the severity of should be classified as high.
penalties sanctioned by entrepreneurs, it is
extremely important to assess, in the context Due to the use of practices unfairly using
of the Act on Counteracting Unfair Use of contractual advantage, entrepreneurs face
Contractual Advantage in Agricultural or Food a fine of up to 3% of turnover achieved by
Product Trade, the conditions according to the entrepreneur in the year preceding the
which that entrepreneur cooperates with its imposition of the penalty.
smaller suppliers or customers.
11Taxation and investment in Poland 2021 | Reach, relevance and reliability
3. Tax system
3.1 Principal taxes The Tax Ordinance is the most general tax 3.3 Administration
The main taxes in Poland are: legislation which defines:
Tax authorities
• Corporate Income Tax; • general taxation rules;
As of 1 March 2017, the National Fiscal
• Personal Income Tax; • tax liabilities of third parties; Administration (Krajowa Administracja
Skarbowa or KAS) was introduced. The KAS
• Tax on civil law transactions (transfer tax); • tax information;
is a specialized government administration
• Value Added Tax; • tax proceedings; engaged primarily with tasks related to
obtaining revenues from taxes, duties, fees,
• Stamp duty; • structure of the tax administration and
and non-tax budget receivables.
• Real Estate Tax; • fiscal confidentiality. As a result, the existing structures of the
tax administration, customs service and
• Excise duty.
Other relevant legislation includes the fiscal audit have been reformed by the
Corporate Income Tax Act, Personal Income establishment of a completely new structure
There is no excess profits tax or alternative
Tax Act, Value Added Tax Act, Civil Law – the National Fiscal Administration (KAS),
minimum tax.
Transactions Tax Act (for capital duties and headed by the Head of the KAS supervised
transfer tax), Local Taxes Act (i.a. real estate by Minster of Finance. The bodies of the KAS
In general, foreign companies and individuals
tax). include also: the Director of the National Tax
pay the same taxes as Polish legal entities
Information, directors of tax administration
and individuals (except where a tax treaty
The parliament passes tax legislation with a chambers, heads of customs and fiscal
provides otherwise).
simple majority of votes. offices, and heads of tax offices.
3.2 Basic legislation
As of 1 March 2017 taxes in Poland are
All taxes in Poland are imposed by the
administered by:
government in Taxation Acts, which set the
rules for imposing taxes, their rates and • Heads of tax offices: Supervise the
duties, as well as taxpayer responsibilities. collection of taxes and enforce debts in
The Minister of Finance may be authorized their territories; conduct tax control; issue
by an Act to decree regulations. All legislation individual administrative decisions in tax
is published in official publications (i.e. the cases.
Journal of Laws and the Official Journal of the
Republic of Poland).
12Taxation and investment in Poland 2021 | Reach, relevance and reliability
• Heads of customs and fiscal offices: Rulings The value of the fee due to the Chief of
Carry out customs-fiscal control of tax Two types of tax rulings are available in Competent Authority amounts to 1% of the
settlements; establish and determine Poland: general and individual. General transaction value (in a period to be covered
levies and place goods under customs rulings aim to ensure that application of the by APA) and ranges between:
procedures. tax law by tax authorities is uniform; general • in the case unilateral agreements:
• Directors of tax administration chambers: rulings may be applied by all taxpayers
and are issued by the Minister of Finance. – related to domestic entities, the
Supervise heads of tax offices and heads
Individual rulings are issued upon a written payment amounts to not less than PLN
of customs and fiscal offices; as a rule,
request by the Director of the National Tax 5,000 and not more than PLN 50,000,
are empowered to review administrative
decisions of tax offices and specific Information. Application of an individual – related to foreign entities, the payment
decisions of heads of customs and fiscal ruling may not be detrimental to the amounts to not less than PLN 20,000
offices. applicant. To obtain a ruling, the taxpayer has and not more than PLN 100,000.
to submit a written request presenting the
• Director of the National Tax Information: actual facts or planned events, the question • in the case of bilateral and multilateral
Issues individual interpretations; and its own opinion on the issue. The ruling agreements, the payments amounts to
harmonizes tax and customs information. remains valid until changed by tax authorities not less than PLN 50,000 and not more
(possible only in specific situations; the than PLN 200,000.
• Head of the National Fiscal Administration:
Responsible for the supervision of the change comes into effect starting from the
specified settlement period, e.g. next year for A taxpayer applying for APA is required to
fiscal administration; carries out specific
CIT) or when the underlying provision of law justify the selected transfer pricing method,
tax procedures, i.a. related to general anti-
is changed rendering the ruling irrelevant. prepare a description and explain the
avoidance rule.
Tax ruling, however, does not protect from application of the selected method, indicate
• Minister of Finance: Responsible for the GAAR clause. the circumstances that could affect the
Polish budget policy; issues general tax correctness of the pricing methodology,
rulings (i.e. rulings issued to all taxpayers). Advance pricing agreements prepare documentation used as a basis
Poland has had an advance pricing for setting the level of transactional prices,
Taxpayers may appeal to the directors of tax agreement (APAs) regime in place since indicate the related parties included in a
administration chambers against decisions of 2006, which allows taxpayers to verify the given transaction and propose the period for
the heads of tax offices or specific decisions correctness of the pricing methodology which the APA should be binding.
of heads of customs and fiscal offices. Please applied in domestic and foreign related
note, that an appeal against the specific party transactions and ascertains the up- Moreover, the limitation of tax deductibility of
decisions of a head of customs and fiscal front acceptance of the transfer pricing intercompany intangible charges, presented
office (i.e. concluding the tax proceedings methodology by the tax administration. in details in section 4.4. Limitation of
conducted by this authority) are generally Unilateral, bilateral and multilateral expenses related to intangible services, does
considered by the authority issuing a decision agreements are possible. not apply to the costs of intangible services
and not a director of tax administration during the period covered by APA decision
chamber. An appeal against a final decision Before submitting an application for an APA, (which can start when APA application is
of the second instance may be directed to the taxpayer may request the Ministry of filed), as well as the tax year in which the APA
the Regional Administrative Court. Taxpayers Finance to advise whether an APA would be application is submitted.
are also entitled to resort to the Supreme useful, determine the scope of information to
Administrative Court to review decisions of be submitted, the procedure and probable
the Regional Administrative Courts. date of conclusion of an APA, its expected
conditions and duration.
In certain situations, the newly created
National Fiscal Administration is also The application has to be submitted by a
responsible for investigating, preventing, Polish entity and the application fee (which
detecting and prosecuting given crimes, depends on the value of the transaction) has
i.e. document fraud, intellectual fraud, to be paid within 7 days of the date when the
using document with false information and application is submitted. An APA is valid up to
intellectual fraud, deceit, organized crime and 5 years, after which time can be renewed (in
participation in an organized criminal group. a simplified procedure).
13Taxation and investment in Poland 2021 | Reach, relevance and reliability
3.4 Double taxation relief
Treaty Network of Poland
Unilateral relief Albania Iran Qatar
Different methods of double taxation
avoidance are potentially available, Algeria Ireland Romania
depending on the particular tax treaty Armenia Isle of Man Russia
concluded with Poland (generally based on
exemption / credit methods principles). Australia Israel Saudi Arabia
Austria Italy Serbia
Tax treaties
Azerbaijan Japan Singapore
Poland has entered into number of double
taxation treaties (90). Many of those treaties Bangladesh Jersey Slovakia
reduce the withholding tax rates applied
Belarus Jordan Slovenia
to dividend, interest and royalties paid by
Polish companies to non-residents. If the EU Belgium Kazakhstan South Africa
Parent-Subsidiary Directive / EU Interest and
Bosnia-Herzegovina Kuwait South Korea
Royalties Directive applies, as a rule no tax is
withheld on dividends, interest and royalties, Bulgaria Kyrgyzstan Spain
respectively.
Canada Latvia Sri Lanka
Ratification of the MLI Convention Chile Lebanon Sweden
On January 23, 2018 Poland submitted to the
China Lithuania Switzerland
OECD a document confirming the ratification
of the Multilateral Instrument to Modify Tax Croatia Luxembourg Syria
Treaties (MLI Convention) to implement BEPS
Cyprus Macedonia Indonesia
(Base Erosion and Profit Shifting) provisions
aimed at counteracting aggressive tax Czech Republic Malaysia Taiwan
planning on international scale. This started
Denmark Malta Tajikistan
the process of amendments to regulations of
double tax treaties signed between Poland Egypt Mexico Thailand
and certain countries. The MLI came fully into
Estonia Moldova Tunisia
force on January 1, 2019 affecting DTT from
different jurisdictions gradually. Ethiopia Mongolia Turkey
Finland Montenegro Ukraine
France Morocco United Arab Emirates
Georgia Netherlands United Kingdom
Germany New Zealand United States
Greece Nigeria Uruguay
Guernsey Norway Uzbekistan
Hungary Pakistan Vietnam
Iceland Philippines Zambia
India Portugal Zimbabwe
Indonesia Qatar
14Taxation and investment in Poland 2021 | Reach, relevance and reliability
3.5 Mandatory reporting of tax- implementation of the arrangement), and in The key assumption of anti-hybrid measures
planning schemes (Mandatory specific situations the auxiliary (understood is to counteract situations exploiting different
Disclosure Rules – MDR) as person who supports the implementation tax treatment of the entity or transaction
As of January 2019, Poland introduced of the arrangement) and the beneficiary occurring under various tax regimes. Based
extensive Mandatory Reporting regulations (the person to whom the arrangement is on the regulations, taxpayers as a rule will not
(MDR) assuming the obligation to report made available). Reporting is performed be entitled to deduct a payment, expense or
to the Head of the National Treasury electronically. Failure to comply with loss from the tax base, if a payment results in:
Administration (KAS) the so-called “Tax reporting obligations entails substantial fines
(i) double deduction – double deduction
schemes”. The assumption is that the (liability under the provisions of the Fiscal
is perceived as a recognition of the same
regulations constitute an implementation Penal Code).
payment as tax deductible in more than
of the Council Directive (EU) 2018/822 -
one jurisdiction without corresponding
nevertheless, in practice, the obligations 3.6 Hybrid structures
dual inclusion of that payment in
imposed are much more far reaching In May 2020 Poland has adopted regulations
respective income (revenues) in those
than those resulting from EU regulations. implementing EU ATAD 2 directive as regards
jurisdictions,
The Directive applies only to cross-border discrepancies in qualifications of hybrid
schemes, while Polish obligation regards also structures. In this respect, new provisions (ii) deduction without inclusion –
reporting of national schemes. Disclosure introduced into the Polish CIT Act aimed at deduction without inclusion is considered
obligations work retroactively to some extent. counteracting hybrid mismatches. The most e.g. as recognizing a given payment as
MDR covers activities (including the ones important change for the taxpayer is need to deductible without the corresponding
that are only planned), in which at least one change the approach towards the charges inclusion of that payment in income
participant is a taxpayer, which have or may from the related parties. Unlike before, (revenues) of the payment recipient.
have an impact on tax liability, and which at the possibility to treat such charges as tax-
the same time meet additional criteria – in deductible costs will also be affected by the
practice rules of identification of activities manner in which the entities recognize charges.
covered by MDR are not fully clear yet. Polish taxpayers have to verify how the related
Mandatory disclosure obligation basically parties / contracting parties treat such charges.
burdens the intermediary (understood as If no verification is performed, in practice the
each person which develops, offers, makes taxpayer may lose the right to recognize the
available, implements or manages the charge as the tax-deductible cost.
15Taxation and investment in Poland 2021 | Reach, relevance and reliability
4. Taxation
of companies
Main taxes applicable to companies operating in Poland
Corporate income tax 19% (standard rate) and
9% (preferential rate)
Withholding tax
Dividends 19%
Interest 20%
Royalties 20%
Branch profits tax -
Net worth tax -
Value added tax 23% (standard rate)
Transfer tax 0.5-2% (standard rates)
4.1 Overview In general, a calendar year is deemed to be 4.2 Taxation of non-residents
Pursuant to the Polish tax law, companies a tax year. However, a taxpayer may change Non-residents are in principle subject to CIT
having their registered seat or place of its tax year by notifying the appropriate tax in Poland only with respect to its taxable
management in Poland are subject to office and indicating a different period as a income earned within the territory of Poland,
corporate income tax (“CIT”) on their tax year. in particular within the following sources of
worldwide income (tax residents). Income revenues:, i.a.:
derived by residents from sources abroad As a result of its accession to the EU, Poland
• any business activity, including via a
is generally subject to CIT under the same has implemented the Parent Subsidiary
Permanent Establishment, carried
rules as income earned from Polish sources, Directive (PSD), merger directive and the
on the territory of Poland. The profit/
unless a tax treaty provides otherwise. Interest Royalty Directive (IRD).
income (taking into account related costs)
attributable to the PE would be subject
The amount of income (loss) is determined Provided that certain requirements are met,
to 19% of the CIT in Poland with the
on the basis of accounting books, with a group of companies may establish a “tax
application of the general taxation rules,
adjustments made according to tax law. capital group” which is treated as a single CIT
as in the case of Polish-based taxpayers;
taxpayer.
16Taxation and investment in Poland 2021 | Reach, relevance and reliability
• real estate located in Poland or income • incomes on securities, costs concerning usage of passenger cars
gained on the sale of this real estate; and related expenses).
• from the exchange of a virtual currency for
• income earned on the sale of shares in the legal tender, goods, services or property
Salaries and wages
Polish company holding mainly real estate rights other than a virtual currency or
In general, expenses incurred by the
assets (which should be regarded as a sale from the settlement of other liabilities with
company for employee salaries and wages
of real estate and is taxed in Poland – the a virtual currency.
are tax-deductible, provided the general
so called real estate clause);
conditions for tax deductions are met.
Business gains
• income earned on securities;
All other revenues that are not included
Limited deductibility of debt finance
• payments from Polish tax residents; in the catalog of capital gains should be
costs
categorized as other operating revenues
• income earned on unrealized gains. The CIT Act provides limited possibility to
(business gains) and taxed separately.
include debt finance costs, from related and
4.3 Taxable income non-related entities, in tax expenses; the limit
Dividends
Taxable income comprises all revenue has been set at the 30% of an indicator close
Dividends received by a company being
earned in a tax year (with some exceptions) to EBITDA. The limit concerns any kind of
a Polish resident from another Polish
decreased by tax-deductible expenses. debt finance costs (e.g. interest, commission,
company or an EU/EEA company may be
As from 2018, for the purpose of taxation, fees, bonuses, interest part of the lease
exempted from taxation if certain holding
company’s revenues are divided into two instalment).
and participation requirements are satisfied
sources of income, so called “baskets”:
(e.g. the recipient has held at least 10% of
The above limit does not apply to the debt
• capital gains (please see the details below) the shares in the payer company for at least
finance costs in a part not exceeding the
and two years). The above rule may also apply to
amount of PLN 3m in a fiscal year. It is
dividends from a Swiss company provided
• other incomes (which includes business/ generally possible to deduct debt finance
that the requirement of holding 25% of
trading incomes). costs that have not been deducted in the
shares is met.
given fiscal year, in the fiscal years to follow
Therefore, an appropriate allocation of costs (as part of the defined limit).
Dividends received from a non-EU/EEA/ Swiss
to baskets is required.
company are aggregated with other taxable
Notional Interest Deduction
income and are subject to the corporate
The crucial consequence of such division is As of 2019 Poland introduced an incentive to
income tax rate of 19%. Double taxation
that losses generated within one source of leave capital for development in companies
treaties provide possible methods of avoiding
income cannot be compensated with profits by increasing the tax attractiveness of
double taxation.
from another source. For example, the tax own financing. To some extent there is a
loss generated on operational activity cannot possibility to increase the costs of obtaining
Potential tax related to dividends received
be compensated by profits from capital gains revenues by the hypothetical equivalent of
by a Polish company from an entity resident
like dividends or revenues derived from IP debt financing costs - despite the fact that
in a non-EU member state with which
rights and vice versa. these costs were not actually incurred by
Poland has concluded a tax treaty may be
the taxpayer (so-called notional interest
credited against the corporate income tax
Capital gains deduction).
liability under certain conditions, in particular
Capital gains, taxed as a separate source of
provided that the Polish company has held at
income, include in particular: Limitation of expenses related to
least a 75% stake in the payer company for at
intangible services.
• typical capital gains like: dividends, least two years before/after the distribution.
The possibility to include in tax costs the
income created as a result of mergers,
expenditures on services purchased from
de-mergers, etc. 4.4 Deductions
related entities (directly or indirectly) is
In general, expenses incurred by a taxpayer
• in-kind contributions to companies; restricted for the following types:
for the purpose of generating, preserving and
• sale of receivables previously purchased protecting taxable revenues are deductible, • consulting services, market research,
by the taxpayer; e.g. employee remuneration, cost of goods/ marketing services, management and
services, net operating losses, paid interest controlling, data processing, insurances,
• sale of shares in companies;
(subject to limitation on deductibility of guarantees and sureties etc.,
• sale of share in partnerships to various debt finance costs), depreciation. Specified
• any royalty fees or payments for using or
property rights and securities, categories of expenses are not tax deductible
being entitled to use intangible assets, like
(e.g. penalties, accrued interest, so called
• incomes derived from intellectual licences, know-how, trademarks,
representation costs, dividends paid, etc.) or
property rights, etc,
are tax deductible only to some extent (e.g.
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