The Expected Tax Changes According to the Polish Deal

According to Muller, the tax package of the “The Polish Deal” will be consulted this week. On 15 May 2021, the government presented assumptions underlying socio-economic measures planned for the coming years. An important section of this Polish Deal paper is connected to tax proposals, some of which shall affect entities operating on the Polish market and the costs of their operations.

The planned changes to the tax law presented so far relate primarily to the issue of taxation of personal income. As announced by the government, the planned changes aim to implement the principle of fairness of tax burdens, according to which people with lower income should not bear a greater burden of tax than people earning more.

What are the Impacts of The Polish Deal:

The proposed changes should have a positive impact on the income of people whose gross income under the employment contract does not exceed PLN 7,000 gross. Also, the government has announced that the tax-free allowance will be raised to PLN 30,000. It has not been clarified whether the regressive nature of the tax-free amount will be maintained.

Another planned change is to raise the second tax threshold from PLN 85,528 to PLN 120,000 annually. The tax rate increases from 17% to 32% on revenues in excess of this amount.

Another change is to unify the amount of the health insurance contribution and the method of its calculation. In this way, both employees and entrepreneurs will pay health insurance contributions at a uniform rate of 9% of the tax base. According to the announcement, the possibility of deducting the paid contribution from the tax base will be excluded. This solution will cause a significant tax and contribution burden for entrepreneurs.

The above proposals are very general. Appropriate regulations implementing the initiatives announced on 15 May 2021 will be drafted in the upcoming months. It could be expected that the final version of the legislation implementing the Polish Deal will be known in Quarter 4 of 2021.

Importantly, the announced changes may considerably affect the costs of running a business in Poland, as well as business and investment plans. Therefore, monitoring the progress of work on the Polish Deal is quite important.

What This Means for Businesses in Poland

Tax policy changes in Poland have direct implications for both domestic and foreign-owned businesses. Companies operating in Poland must stay informed about regulatory developments to optimize their tax position and maintain compliance. The Polish tax system includes CIT (19% standard, 9% for small taxpayers), VAT (23% standard rate with reduced rates of 8% and 5%), and various sector-specific levies.

For international entrepreneurs and investors, understanding the Polish tax landscape is essential for business planning. Poland offers several attractive incentives including the Polish Investment Zone (up to 15 years of CIT exemption), R&D tax relief (up to 200% deduction), and the IP Box regime (5% effective CIT rate on qualified intellectual property income). Professional tax advisory can help identify the most beneficial structure for your specific situation.

The interplay between Polish domestic tax law and international tax treaties is particularly important for foreign-owned entities. Transfer pricing regulations, withholding tax provisions, and anti-avoidance rules (GAAR) require careful navigation to ensure both compliance and optimization.

If you are doing business in Poland or considering entering the Polish market, Zalewski Consulting can help. Learn more about our tax advisory services in Poland, or contact us for a free consultation.