Simplified advance tax payments for companies

New rules of paying advance income tax payments for entrepreneurs, which theoretically are to make settling them easier, come into effect from February. Such solution is quite beneficial for company owners, as it offers more favourable terms of settlements with tax authorities.

The deadline for choosing the simplified advance tax payments is 20 February of a given year. Taking advantage of this privilege depends on how long a company exists, which must be at least two years. Of course, one may still use the standard forms of settlement of income tax and advance tax payments.

If a taxpayer does not submit a notice to the Head of Tax Office about choosing the simplified form of settling advance tax payments by the 20 February of a given tax year, it is assumed they will settle advance payments in the form previously selected. Such notice may also be submitted pursuant to the provisions on the freedom of economic activity through Central Registration and Information on Business (CEIDG).

The new rules allow to pay advance tax payments calculated based not on the real income, but the income that constitutes the basis for calculating advance tax payments divided by 12. In the case of linear tax, the amount needs to be multiplied by 19%. For tax scale, the advance tax will be 18% or 32% of last year’s income, which is next reduced by a tax credit and health contributions and divided by 12 months.

This means that if the projected income for a given year is higher than for the previous year, the taxpayer takes advantage of the possibility to pay lower advance payments. However, you should not forget about the fact that the need to settle them each month exists even in the situation the company’s operations in a given year do not accrue income or it is lower than the income that constitutes the basis for calculating advance tax payments.

And what if in a financial year, we generate much lower income than in the previous year that is the basis for calculating simplified advance payments? Article 22.2a of Tax Ordinance may help here, which says that withholding of advance tax payments may be limited by tax authorities upon taxpayer’s request.

The taxpayer must, however, make it plausible that the amount of advance tax payments established based on the general rules would be disproportionately high compared with the tax on income projected for a given year. The decision is made by the tax authority after completing proceedings – and it is discretionary.

For the basis for calculating simplified advance tax payments in case of not earning income in the previous year, you take into consideration the year before, i.e. in 2017 you will take into account income from 2015. Yet, if a taxpayer in the last two years did not generate any income or did not exceed the amount that brings obligation to pay tax, it is not possible for them to use simplified advance tax payments in 2017.

The deadlines for paying simplified advance tax are the same days that concern all taxpayers in the monthly payment system. They should therefore be settled by the 20^th day of the month following the month the advance tax applies to. The payment for the last month in year should be made by the 20^th of January of the next tax year. However, if the taxpayer submits a tax return and pays the arising tax before the deadline, they do not need to settle the last advance tax payment.

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.