PolandTax Obligations Detailed

In Poland, employers have various tax obligations related to payroll, corporate income tax, and other levies.

Payroll Taxes

Employers withhold and remit personal income tax (PIT) for employees. The PIT rates are 12% for annual income up to PLN 120,000 and 32% for income exceeding this threshold. PIT is remitted by the 20th of the following month. Employers also issue PIT-11 forms to employees by the end of February and file them with tax authorities by the end of January. Additionally, employers must distribute payslips and ensure compliance with payroll reporting requirements.

Corporate Income Tax (CIT)

The standard CIT rate is 19%. Small taxpayers (with annual revenue below EUR 2 million) and new companies (in their first year) benefit from a reduced 9% rate. The CIT is generally filed through a self-assessment tax return by the end of the third month following the tax year's end. Poland also implements a global minimum tax of 10% for large multinational enterprises (MNEs) with revenues over EUR 750 million, starting in 2025. Small taxpayers are defined as those with revenues below a certain threshold (approximately PLN 9,218,000 for 2025).

Social Security and Health Insurance Contributions

Employers and employees contribute to social security. As of today (2025-02-05), available sources provide information for 2023 and 2024; 2025 numbers are yet to be made available. In 2024, employer contributions were 19.21% to 22.41% of the employee's gross salary, with some part of these calculations changing after the salary exceeds PLN 234,720. Employee contribution is 13.71%. Health insurance contributions are calculated based on the employee's income. As of 2025, there are changes to these amounts.

Other Tax Obligations

Employers must comply with various other tax obligations, including VAT, excise duty, real estate tax if applicable, and other reporting requirements like JPK_CIT and Intrastat declarations. The minimum wage for 2025 is PLN 4,666 gross per month, which impacts not only salary but also social security contributions calculations. As of 2025, Poland introduced a new law on equalization tax for international and domestic groups and new reporting obligations.

Additional Considerations

Starting from 2024, a minimum income tax of 10% applies to certain companies with low profitability or losses, as defined by the updated Corporate Income Tax Act. Christmas Eve is a public holiday starting in 2025, and there's an additional trading Sunday in December. Employers must be aware of updated ESG reporting obligations. Employers should note that information might be updated as the year progresses.

In Poland, employees are subject to various tax deductions and contributions from their gross salary. These deductions fund social security programs and contribute to the national budget through income tax.

Income Tax (PIT)

• Tax Thresholds and Rates: Poland employs a progressive income tax system with two tax brackets. As of 2025, the first bracket is taxed at 12% for income up to PLN 120,000, and the second bracket is taxed at 32% for income exceeding PLN 120,000.
• Tax-Free Allowance: A tax-free allowance of PLN 30,000 annually is applicable, effectively exempting this portion of income from taxation.
• Young Employee Exemption: Individuals under 26 are exempt from income tax on employment income.
• Deductible Expenses: Employees can deduct standard expenses of PLN 250 monthly (up to PLN 3,000 annually) from their taxable income. This limit increases to PLN 4,500 annually for employees with multiple employment contracts. Certain professions, like those involving copyright, may qualify for higher deductible expense rates.

Social Security Contributions (ZUS)

• Employee Contributions: Employees contribute a total of 13.71% of their gross salary towards social security. This encompasses pension, disability, sickness, and accident insurance. The sickness insurance contribution is 2.45%, while the remaining 11.26% covers pension and disability.
• Contribution Cap: Contributions for pension and disability insurance are capped at a specific annual limit. This limit is PLN 260,190 for 2025. Earnings beyond this cap are not subject to these particular contributions.
• Healthcare Contribution: A separate 9% healthcare contribution is also mandatory. Up to 7.75% of this contribution is tax-deductible, while the remaining 1.25% is not.

Other Deductions and Considerations

• Tax Return Filing: Employees generally do not need to file an annual tax return, as the tax is withheld at the source by the employer. However, individuals with multiple income sources or those wishing to claim specific deductions might need to file. The deadline for filing is April 30th of the following year.
• Employer Contributions: Employers also contribute to the social security system on behalf of their employees. These contributions range from 19.21% to 22.41% of the employee's gross salary, depending on factors such as the industry and company size.
• Benefits and Allowances: Certain employee benefits might be exempt from taxation or social security contributions, while others are taxable. It's important to understand the specific rules regarding different benefits.

Value Added Tax (VAT) is a consumption tax levied on most goods and services sold in Poland.

VAT Rates in Poland

• Standard Rate: 23% (applies to most goods and services)
• Reduced Rates: 8% and 5% (for specific goods and services listed in the VAT Act)
• Zero Rate: 0% (applies to very limited categories, like certain exports and intra-community supplies)

As of January 1, 2025, certain adjustments have been made to the reduced VAT rates, impacting specific categories. These changes align Polish law with European Union legislation. For example, a 0% VAT rate applies to rescue vessels and lifeboats used at sea, while menstrual cups now have a reduced 5% VAT rate. Live equines and smokable or inhalable hemp products (excluding medical marijuana) have seen their rate increased to 23%.

VAT Registration

• Threshold: PLN 200,000 per year for Polish businesses. This threshold includes intra-community supplies of goods and certain reinsurance services. For businesses established elsewhere in the EU, an EU-wide turnover limit of EUR 100,000 applies for exemption purposes. Foreign businesses not established in Poland but conducting taxable activities there, generally must register for VAT regardless of turnover. However, exemptions exist for those supplying services where the reverse-charge mechanism is applied, along with certain zero-rated services (like those in Polish seaports linked to international transport).
• EU Businesses (Distance Selling): A separate distance selling threshold of PLN 160,000 applies to EU-registered businesses selling goods online to consumers in Poland.

VAT Filing and Payment

• Filing: VAT returns are filed electronically through the Standard Audit File for Tax (SAF-T or JPK_V7), which combines VAT return data and VAT records. Returns are typically filed monthly (JPK_V7M) but some smaller taxpayers can opt for quarterly filing (JPK_V7K).
• Deadline: The 25th day of the following month. If this date falls on a weekend or holiday, the deadline moves to the next business day.
• Payment: Due date is the same as the filing deadline. Paid via bank transfer in Polish Złoty (PLN).

VAT Refunds

Poland offers several VAT refund procedures. Taxpayers registered for VAT in Poland can apply for refunds to a Polish bank account or a designated VAT account within the split payment mechanism. The standard refund deadline is 60 days from the return submission date. A shortened 25-day deadline exists for taxpayers meeting specific requirements, while an extended 180-day deadline may apply for companies inactive in a given period.

VAT Exemptions

• Subjective Exemptions: Available for certain small businesses meeting the turnover criteria and other specific conditions.
• Objective Exemptions: Apply to certain goods and services, such as certain financial, medical, educational, and cultural services, irrespective of the business's turnover.

Additional Notes

This information is relevant as of February 5, 2025, and is subject to potential changes. Consulting with a tax advisor is always recommended for specific circumstances.

Poland offers a range of tax incentives for businesses and individuals in 2025. These include incentives for research and development, specific programs for high-net-worth individuals, and more general tax reliefs.

Corporate Tax Incentives

• Research and Development (R&D) Relief: Companies engaged in R&D can deduct 100% (or 200% for personnel costs) of eligible R&D expenses. Additional incentives are available for entities with "R&D Center" status, including a potential tax exemption of up to 50% of two years of labor costs or eligible capital expenditure, and potential grants of up to 10% of the purchase price of fixed assets or up to EUR 3.9K per newly created workplace for initial investments within R&D Centers. R&D centers located in Special Economic Zones (SEZs) may also qualify for additional tax exemptions. There's also a Technology Tax Relief allowing a deduction of up to 50% of expenditure for new technology acquisition (intangible assets) and an "IP Box" (Innovation Box) offering a preferential tax rate (5%) on income derived from qualifying intellectual property rights generated through R&D.
• Corporate Social Responsibility (CSR) Sponsorship Relief: Businesses can deduct 50% of deductible expenses related to cultural, social, or sports sponsorships.
• Deductibility of Related-Party Intangible Services: Up to PLN 3 million of expenses for related-party intangible services are fully deductible annually, with excess limited to 5% of tax EBITDA.

Individual Tax Incentives

• Personal Allowance: A tax-free amount of PLN 30,000 is applicable to income taxed according to the tax scale.
• Return Relief: Polish citizens returning to Poland after living abroad for at least three years may qualify for a four-year income tax exemption up to PLN 85,528 annually. This applies to income from employment contracts, contracts of mandate, or business activity. Specific conditions apply regarding residency requirements to qualify for the return relief. This is valid as of today, February 5th 2025, and the relief might be subject to change in the future.
• Lump-Sum Tax for High-Net-Worth Individuals (HNWI): Individuals relocating to Poland who haven't resided in the country for at least five of the six years preceding their move can opt for a lump-sum tax. This entails a flat payment of PLN 200,000 annually, plus PLN 100,000 for each family member, regardless of the actual foreign income earned (excluding Controlled Foreign Corporation (CFC) income). This is valid as of today, February 5th 2025, and the rules for lump-sum taxation for HNWI might be subject to change in the future.
• Reduced Health Insurance Contribution: From January 1, 2025, the minimum health insurance contribution for entrepreneurs taxed under the progressive or flat-rate system will be calculated based on 75% of the minimum wage, providing a 25% reduction. Entrepreneurs can also choose whether to include income and expenses from the sale of fixed assets in the health insurance contribution base. This is valid as of today, February 5th 2025, and the rules for reduced health insurance contributions might be subject to change in the future.

Other Tax Reliefs and Deductions

• Charitable Contributions: Donations up to 6% of taxable income can be deducted.
• Internet Connection Expenses: A deduction of PLN 760 is available for two consecutive years.
• Blood Donation: A monetary equivalent can be deducted, up to 6% of total income subject to progressive taxation.
• Payments to Individual Insurance Security Account (IKZE): Deductions are available for payments made to the IKZE, up to a certain limit.
• Rehabilitation Expenses: Disabled taxpayers or those supporting a disabled person can deduct rehabilitation expenses.

Upcoming Changes & Considerations

• Global Minimum Tax (GMT): From January 1, 2025, Poland implements the OECD's global minimum tax framework for large multinational and domestic groups. This involves a global minimum tax, a domestic minimum tax, and a top-up tax on undertaxed profits. This is valid as of today, February 5th 2025, and the implementation of the OECD's global minimum tax framework is subject to change in the future.
• Digital Accounting Requirements: Poland is gradually introducing digital accounting requirements.
• Real Estate Tax: Updates to real estate tax definitions are in effect.

This information is current as of February 5, 2025, and may be subject to change. Consulting with a tax advisor is recommended for personalized advice.