Poles Forgo Billions in Tax Relief, Fueling Budget Surplus

A new report compiled by PITax at the request of the Ministry of Finance reveals that Poles are missing out on thousands of zlotys in potential tax savings, significantly boosting the state budget. The data for the 2024 tax period indicates a widespread reluctance or inability among taxpayers to utilize available tax reliefs and deductions.

A striking statistic shows that one in five taxpayers had their tax return automatically approved without claiming any form of relief. Furthermore, a staggering one-third of all taxpayers in Poland claimed no tax relief whatsoever.

Causes and Consequences of Unclaimed Reliefs

Tax experts point to several factors contributing to this trend:

• Complexity: Approximately one-quarter of taxpayers struggle to understand the rules governing tax relief and deductions.
• Low Profit/Effort Ratio: Some taxpayers may deem the potential savings from certain reliefs too small to justify the effort required.
• Fear of Scrutiny: Dr. Aleksander Łożykowski, a former director at the Ministry of Finance, suggests a key factor is the fear of “the tax office’s interest” that claiming a relief might provoke.

Dr. Krzysztof Biernacki, a tax advisor at PITax, emphasizes the financial cost to citizens, stating that “People who leave their tax returns untouched are giving up thousands of zlotys annually.” He stresses that this situation “clearly signals the need for education on the tax relief and deductions they are entitled to.”

Massive Gains for the State Budget

The non-utilization of these reliefs has had a massive financial impact on state finances.

• In 2024, taxpayers’ contributions (subsidies) in personal income tax totaled PLN 14.9 billion, representing an increase of over PLN 4 billion (38%) from the previous year.
• The average subsidy to the state budget was PLN 3,900, which is more than two and a half times higher than the average tax refund of PLN 1,500.

However, the Ministry of Finance data also confirms that the overall system is refunding more than it receives. For 2024, tax authorities refunded a total of PLN 23.7 billion, an amount that is PLN 8.8 billion more than the total subsidies due. Despite this overall negative balance from the state’s perspective, the failure of a large portion of the public to claim legitimate deductions is clearly injecting billions of unused zlotys into the state budget.

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.