Corporate Income Tax is imposed on the following entities:
According to the general principles, the subject of the income tax is the income, regardless the type of revenue sources from which it has been earned.
The tax rates are the following:
A foreign entrepreneur who runs a branch or a representative office is subject to Corporate Income Tax in Poland in respect of the income earned in Poland, unless otherwise specified in an international treaty on avoidance of double taxation.
The taxable base is the difference between the revenues and the tax-deductible costs incurred in the tax year. When the difference is negative, it constitutes a tax loss.
A taxpayer of the Personal Income Tax is a natural person generating taxable income in Poland.
Polish law allows the possibility of a joint settlement for spouses, provided that the appropriate application is filed.
Individuals whose place of residence is Poland are subject to unlimited tax liability. They are liable to tax on their entire income regardless of where it is generated.
Individuals are regarded as Polish residents if:
Individuals who do not have a place of residence in Poland are liable to tax only on the income earned in Poland (limited tax liability).
In principle, all the income of the taxpayer established in Poland is taxed.
If the taxpayer earns income from more than one source, the total amount of income derived from all the sources is subject to taxation in the fiscal year.
Income is defined as an excess of revenues derived from a source over tax deductible costs generated in a tax year. If the costs exceed the revenues, a loss is generated from a given source.
The Value Added Tax on goods and services was introduced into the Polish legal system in 1993. The following transactions are subject to VAT taxation:
The basic VAT tax rate in Poland is 23%. The legislature provided also for the reduced tax rates of 8%, 5% and 0%.
The tax base of VAT is the amount which constitutes consideration paid or owed in return for the supply of goods or services, including the obtained grants, subsidies and other payments of a similar nature which affect the price of goods.
TCLT is imposed on transactions where ownership of things and property rights is transferred but neither party is a VAT payer. Increases of share capital are also taxable.
TCLT applies to all major transactions, such as: sale contracts (including those pertaining to shares in Polish companies), exchange contracts, loan agreements, mortgages, partnership deeds, and companies’ articles of association.
The tax rate depends on the type of taxable transaction. Examples include: sale of real estate: 2% of the market value of the real estate, sale of other property rights: 1% of the market value of such rights (this includes shares in Polish companies and other securities), loans: 2% of the loan amount, increase of share capital: 0.5% of the amount of the increase, contribution to a partnership: 0.5% of the value of the contribution.
In terms of the articles of incorporation, the TLC tax can be refundable in two cases. Firstly, if the company has not been registered in the register of entrepreneurs; secondly, if the increase of the share capital is entered in the Register of Entrepreneurs in the amount lower than the amount specified in the relevant resolution – in such case the tax will be refunded in the part in which the actual increase of the capital differs from the amount previously set in the resolution.
This tax is imposed on natural persons, legal entities and organizational units, including partnerships without legal personality, who own or possess real property or perpetually use land. Taxable real estate includes land, buildings and parts thereof, as well as fixed installations used for business activities and parts thereof.
The tax base varies depending on the category of real property. Rates are fixed amounts per area unit or percentages in case of fixed business installations.
They are prescribed in resolutions of community councils within statutory limits. The qualification of the property and its use influence the rates (higher rates apply to business property and lower rates to dwelling).
Vehicle tax is determined by a commune council, but it cannot be higher than limits given by the legislator. Within the scope of taxation are lorries over 3.5 tons, trailers, and buses. The tax base is the admissible total weight of a vehicle for lorries and trailers, and number of seats for buses.
Transactions between related parties should be conducted in accordance with the arm’s-length principle. The tax authorities can increase the taxable base if the pricing used between related parties differs from that which would have been used between unrelated parties in a similar business transaction, and if the difference results in income being shifted from a Polish taxpayer to another entity (whether a Polish resident or not). The Polish Corporate Income Tax Law also contains detailed and restrictive requirements for transfer pricing documentation. The documents must be presented within seven days from the notice of inspection and a penalty tax of 50% is imposed for incomplete or improper documentation.