Poland Lowers Corporate Income Tax for Small Enterprises

This week the President of Poland, Andrzej Duda, signed a bill that lowers the corporate income tax for small enterprises registered in Poland. This is the final step of the legislation process and soon the new provisions will come into effect. The CIT rate in Poland will go down from 15 to 9 percent.

The lowered rate will apply to businesses that according to current regulations are classified as small companies, i.e. enterprises whose revenue does not exceed 1.2 million EUR in a tax year (or equivalent in different currencies) and employ no more than 50 people.

The Importance of Corporate Income Tax:

However, as a lot of small companies in Poland are subject to Personal Income Tax rather than Corporate Income Tax, the lowered tax rate will only apply to around 440 thousand businesses: limited liability companies, joint stock companies and limited joint-stock partnerships. Moreover, the Ministry of Finance decided to tighten the conditions that need to be met to use the lower tax rate.

That is not all when it comes to changes in CIT in Poland. When the new provisions come into effect, capital groups will be freed from the obligation to publish information on the group’s registration in Monitor Sądowy i Gospodarczy [Court and Commercial Gazette]. Moreover, the lawmakers extended the catalog of entities whose revenue is not considered capital gains revenue.

The Ministry also decided to introduce changes to the act on Personal Income Tax. The most important of them concerns the amortization of cars. The threshold of amortization write-offs treated as tax-deductible expenses will be increased from 20 thousand EUR to 150 thousand PLN for non-electric cars and 225 thousand PLN for electric cars.

According to Ministry experts, the changes are going to make fiscal law provisions more transparent, easy to follow and taxpayer-friendly. The new act will come into effect on 1 January 2019.

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.