Business registration in Poland: What taxes do entrepreneurs expect?

Registering a business in Poland is a promising step for entrepreneurs seeking to enter the European market. Poland offers a stable business environment, a favorable location, and favorable conditions for investors. However, every entrepreneur must take into account the tax obligations that arise after the company is registered. In this article, we will discuss the main taxes that businesses in Poland are expected to pay, as well as the specifics of their calculation and reporting.

Types of business structures in Poland

Before registering a business, an entrepreneur must decide on the type of legal structure, as each of them has different taxation requirements. The main forms of business in Poland:

1. Individual entrepreneurial activity (Jednoosobowa Działalność Gospodarcza) – the most popular form for small businesses and freelancers.
2. Limited liability company (Spółka z ograniczoną odpowiedzialnością, Sp. z o.o.) – suitable for small and medium-sized businesses, especially popular among foreign entrepreneurs.
3. Private joint-stock company (Spółka akcyjna, S.A.) – usually used for large companies and corporations planning to attract investors.

The choice of business form affects the taxation structure, the amount of taxes and the reporting procedure, so it is important to choose the form that best suits the entrepreneur’s goals.

Main taxes for entrepreneurs in Poland

After registering a business in Poland, an entrepreneur is obliged to pay several basic taxes. These include:

1. Income tax (PIT or CIT)
2. Value added tax (VAT)
3. Social security contributions (ZUS)

Let’s take a closer look at these taxes.

Income tax: PIT and CIT

The choice between PIT (Podatek Dochodowy od Osób Fizycznych) and CIT (Podatek Dochodowy od Osób Prawnych) depends on the type of business.

PIT – Personal income tax

If an entrepreneur is self-employed, he/she pays PIT. The following PIT rates apply in Poland:

• 12% for annual income up to PLN 120,000.
• 32% for income over PLN 120,000.

There is also a flat rate of 19% for entrepreneurs who choose the linear PIT. The linear rate is convenient for entrepreneurs with high incomes, as it allows them to avoid the progressive taxation system.

CIT – Corporate income tax

For limited liability companies (Sp. z o.o.) and joint stock companies (S.A.), corporate income tax (CIT) is applied. Basic CIT rates in Poland:

• 9% for small companies with annual income up to EUR 2 million.
• 19% for large companies exceeding this limit.

Entrepreneurs can also choose a simplified system – the so-called “Estonian CIT” or Estoński CIT, which allows them to postpone tax payments until the moment of profit distribution among shareholders.

Value added tax (VAT)

VAT in Poland is paid by all entrepreneurs who sell goods or provide services. The main VAT rates are as follows:

• 23% – standard rate for most goods and services.
• 8% – a reduced rate for certain types of services and goods, such as construction work and hotel services.
• 5% – applies to basic foodstuffs and printed publications.

For companies that export or trade with partners in the EU, a 0% VAT rate may apply. Businesses that do not exceed PLN 200,000 in annual sales can avoid registering as a VAT payer, but in this case they are not entitled to a VAT refund on purchases.

Social security contributions (ZUS)

Social security contributions in Poland are mandatory for all entrepreneurs and include health insurance, pension and social security. The main categories of contributions:

1. Health insurance – about 9% of the amount of income, but the minimum monthly contribution is about 382 PLN (for 2024).
2. Pension insurance – depends on the minimum base, which changes annually, and amounts to about PLN 812.
3. Social insurance – includes accident and disability insurance.

New entrepreneurs are entitled to a tax rebate for the first 24 months of operation, which allows for a significant reduction in social security contributions.

Declarations and reporting

All entrepreneurs, regardless of the type of business they choose, must submit regular reports to the tax authorities. The main forms of reporting:

1. PIT or CIT declarations – filed annually by April 30 for individual entrepreneurs or by the end of the third month after the end of the financial year for companies.
2. VAT returns (JPK_VAT ) – submitted monthly or quarterly via the JPK_VAT system.
3. Social security contributions (ZUS ) – submitted monthly with the corresponding payments to ZUS.

The e-Urząd Skarbowy electronic system allows for online submission of reports, which greatly simplifies the reporting process and reduces the risk of submission errors.

Tax benefits and reimbursements

The Polish tax system offers entrepreneurs a number of benefits and opportunities for tax refunds. The main ones are:

• Tax incentives for research and development – allow for a tax reduction for companies that invest in innovative projects.
• Depreciation deductions – to reduce the tax base for companies investing in development.
• VAT refunds – for companies that export goods or carry out operations in the EU. Refunds can be made within 25 to 60 days.

Business in Poland is your opportunity to reach a new level

Registering a business in Poland gives entrepreneurs the opportunity to take advantage of the European market, but requires knowledge of basic tax obligations. Choosing the right legal form of business, understanding the PIT, CIT and VAT rates, as well as timely filing of reports will help to avoid fines and make the tax system more transparent. Thanks to a number of benefits and electronic reporting services, the Polish tax system is convenient for new entrepreneurs and allows them to effectively plan their tax expenses.