Taxes on income in a limited company

A limited company is subject to tax pursuant to the rules stipulated in the Legal Persons’ Income Tax Act. The act establishes the model of double taxation on the distributed profit in a limited company.

The first tax we need to pay is CIT tax on company income at the rate of 19%, then the reduced amount will be taxed once with PIT tax at the rate of 19% as a dividend, i.e. income paid to shareholders.

A single person limited company, the only owner and shareholder of which is the same person, is taxed the same way. You should in this case pay the charge by the 20^th day of the following month, running from the end of the financial year, and you should also file a CIT-2 form.

When a shareholder pays a dividend, they also have to pay 19% PIT tax, while it is the limited company that is responsible for the tax (company income after tax is shared between the shareholders). The payment is a net amount and is subject to tax deduction.

It is also possible not to pay a dividend and apply income towards the losses from previous years. In case the company decides to assign the income to a special or reserve fund, the company does not pay double rates. Unless it decides to increase the share capital, if this is the case it will have to cover the double rates.

This means that a limited company pays tax on the accrued income that results in profits that may be paid to shareholders in the form of the so-called dividend, which is subject to tax. The effect is that the income that the company generated is double taxed (CIT and PIT tax).

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.