The Polish tax system is harmonized with the EU directives. Poland has entered into almost one hundred double tax treaties. The tax system in Poland provides for several types of taxes. Most of them are direct taxes, e.g.:
- personal income tax,
- corporate income tax,
- inheritance and donation tax,
- real estate tax.
- other are indirect taxes, such as:
- goods and services tax (VAT),
- excise duty.
Corporate taxpayers, if they have a seat or management in Poland, are subject to taxation on their entire income, regardless of where they are located. Corporate taxpayers, if they do not have a domicile or management office in Poland, are subject to tax only on the income that they generate in Poland.
The income is the surplus of the sum of revenues over the costs of obtaining them, achieved in the fiscal year.
The corporate tax rate is 19%, and for small taxpayers and startup taxpayers, only 15%.
Taxation of dividends
Dividends are taxed at a 19% rate, whether received by an individual or a corporation. However, if a dividend is paid to a non-resident, the provisions of the relevant double taxation agreement may apply.
Value Added Tax (VAT)
The VAT rate of 23% applies to most products and services, and a reduced VAT rate may apply to certain specified activities. For example, a VAT rate of 8% applies to construction, renovation, modernization, and redevelopment of buildings, and a 5% VAT rate applies to basic food products (e.g. bread, dairy products, meat products, cereal products: flour, cereal, pasta, juices) and books. There are plans to change these rates in 2018.
Income tax from individuals
The personal income tax rate is 18%, but if the income earned during the year exceeds the amount of PLN 85,528 (about EU 20,000) then the tax rate is 32%.
Foreign investors are taxed in Poland if they live in Poland (e.g. when they stay in Poland for over 183 days a year). A person who does not live in Poland pays tax only on the income that he has earned in Poland, to the extent allowed for in the double taxation agreement.