What Is the Corporate Tax Rate in Poland?

Poland’s corporate tax framework provides several distinct taxation models, moving beyond a single, flat-rate structure. This system allows different types of companies to align their tax strategy with their specific operational and financial circumstances. Understanding these options is a key step for any entity considering business activities within the country.

The Main Corporate Income Tax Rates

The standard Corporate Income Tax (CIT) in Poland is 19% on a company’s net income. This rate applies to the majority of corporate taxpayers and is calculated based on the income a company generates during its business activities over a tax year.

Alongside the standard rate, a lower 9% CIT rate is available. This preferential rate is intended for specific categories of taxpayers, primarily smaller businesses and new enterprises. The specific eligibility rules determine which companies can benefit from this reduced tax burden.

The corporate tax system also includes a minimum income tax. This tax applies to companies that either report a tax loss from their operations, excluding capital gains, or have a profitability ratio of 2% or less. The rate is 10%, calculated on a special tax base.

Qualifying for the Reduced 9% Rate

To apply the 9% CIT rate, a company must hold the status of a “small taxpayer.” A business qualifies as a small taxpayer if its sales revenue from the preceding tax year did not exceed the equivalent of EUR 2 million. This euro amount is converted into Polish Złoty using the average exchange rate published by the National Bank of Poland on the first business day of October of the previous year.

Newly established companies receive special consideration. During their first year of operation, they can utilize the 9% CIT rate until their revenue surpasses the EUR 2 million threshold within that initial tax year.

Certain corporate structures and transactions can disqualify a company from using the reduced rate. For instance, a company formed from specific restructuring activities, such as the division of a previous entity, may be ineligible. This restriction prevents companies from reorganizing solely to gain access to the lower tax rate. The 9% rate applies to general operating income, not to capital gains.

The Estonian CIT Regime

Poland offers an alternative taxation model known as “Estonian CIT,” which changes when tax is paid. The Estonian model defers tax liability until profits are distributed to shareholders as dividends. This allows a company to reinvest its earnings without an immediate tax charge, supporting growth and capital accumulation.

Eligibility for this regime is subject to several conditions.

• The company must be a specific type of capital company, such as a limited liability or joint-stock company.
• Its shareholders must be exclusively natural persons.
• The company cannot hold shares in other entities.
• It must employ at least three individuals on a contract of employment or incur equivalent monthly salary expenditures.
• Passive income, such as from interest or royalties, cannot exceed 50% of the company’s total operating income from the previous tax year.

Companies opting for this system pay a lump-sum tax upon profit distribution at a rate of 10% for small taxpayers and new businesses, or 20% for other taxpayers. To enter the regime, a company must submit a specific declaration by the end of the first month of the tax year in which it intends to use the model.

Withholding Tax Obligations

Polish companies have withholding tax (WHT) obligations on certain payments made to other entities, as this tax is collected at the source by the payer. The standard domestic WHT rate for distributions like dividends is 19%. For payments of interest and royalties to non-residents, the standard WHT rate is 20%.

Poland has an extensive network of double tax treaties (DTTs) with other countries. These treaties can reduce or eliminate the withholding tax on payments to residents of treaty partner countries. For payments made within the European Union, specific directives can also provide exemptions from WHT on dividends, interest, and royalties paid between associated companies, provided certain conditions are met.