The tax system in Poland is characterized by a variety of taxes levied on individuals, entrepreneurs, and legal entities. It operates at several levels—national, local, and municipal, each setting its own rates and rules. Let’s explore the key elements of Poland’s tax system.
Main Types of Taxes in Poland
Personal Income Tax (PIT)
Poland applies a progressive income tax scale for individuals. The income tax depends on the annual income level:
- Income up to 120,000 PLN: tax rate of 12%.
- Income above 120,000 PLN: tax rate of 32%.
For employees, the tax is withheld by the employer through the PAYE (pay-as-you-earn) system. Additionally, there are tax exemptions and discounts, notably for young people (under 26 years old), who do not have to pay PIT on income up to 85,528 PLN per year.
Corporate Income Tax (CIT)
Poland has a corporate income tax (CIT) with the following rates:
- Standard rate: 19%.
- Reduced rate: 9% for companies with an annual income not exceeding 2 million PLN.
Some types of business activities may qualify for different special rates or exemptions, such as for small and medium-sized enterprises. Poland also offers several tax incentives for investors in high-tech and innovative sectors.
Value Added Tax (VAT)
Poland applies a standard VAT rate of 23% on most goods and services. There are also reduced rates:
- 8% for some goods and services (e.g., food, medical supplies).
- 5% for books, newspapers, and certain medications.
- 0% for export transactions and cryptocurrency-related operations.
New companies may apply for a simplified VAT system, which reduces the administrative burden during the early stages of operation.
Social Contributions
Polish employers and entrepreneurs are required to make social security contributions, which include:
- Pension insurance — 19.52% of income.
- Sickness insurance — 2.45%.
- Accident insurance — depends on the type of business activity.
- Unemployment insurance — 2.80%.
These contributions are deducted from employees’ wages or entrepreneurs’ income, depending on their business structure.
Local Taxes
Municipalities in Poland also have the authority to impose certain taxes, such as:
- Property tax — levied based on the value of the property, with different rates depending on local regulations.
- Transport tax — for businesses owning vehicles or other transportation means.
Other Taxes
- Inheritance and gift tax — rates can range from 3% to 20%, depending on the degree of kinship.
- Excise tax — applied to certain goods, such as tobacco, alcohol, and energy products.
- Financial transaction tax — applied to certain financial market transactions.
Special Tax Regimes
Poland offers several simplified tax regimes for small entrepreneurs, which help reduce administrative burden:
2%
Tax rate on income from the sale of products derived from the processing of plant and animal products from personal cultivation and breeding.
3%
Tax rate on income from trade or public catering activities.
5,5%
Tax rate on income from activities related to construction.
Tax Benefits and Investment Opportunities
Poland provides various tax benefits for entrepreneurs, including:
- Research and development tax incentives for companies investing in innovation.
- Preferential tax rates for startups during their first years of operation.
Poland’s tax system is relatively straightforward and offers entrepreneurs the flexibility to choose from various tax regimes depending on their business structure. The main taxes, such as PIT, CIT, and VAT, have clear rates, and there are tax incentives available to reduce the tax burden, particularly for small businesses and startups.
Pay less – within the law
Our experts will help you avoid overpayments by using all available tax instruments in Poland.
