Peculiarities of taxation in Poland

Organization of business in the post-Soviet space does not always give the expected result and is associated with enormous difficulties in maintaining financial records. Therefore, more and more often, owners of companies from the CIS pay attention to European countries, in particular Poland, as the closest in terms of location and cultural traditions. Opening a branch here, and, possibly, a parent company with the subsequent acquisition of citizenship - these are the most pressing issues of interest to citizens who have their own business and who want to settle in the European Union. But before deciding to take such a step, it would be useful to learn all the nuances of the modern taxation system in Poland.

Tax rates for entrepreneurs

The current taxation system in the country complies with European standards. It began to form in 1991 and is considered the most favorable for business development. In it, the tax rate for private business owners is calculated using a progressive scale. In percentage terms, it looks like this:

• income tax for both the LLC and the members of the board of the company is 19%;
• VAT (which is an analogue of VAT) is paid quarterly and, at a base rate of 23%, can be reduced to zero, depending on the type of activity;
• 0.5% is charged from cash received on the account of the company.

In addition, the employer makes mandatory payments for each employee in the form of pension and insurance contributions, which amount to 45% of the minimum wage for each employee. Today it is 700 PLN.

It is necessary to submit the accounting documentation of the company monthly and annually the final report.

These are the main points of the principle of taxation, and they are obligatory for all business entities, regardless of their citizenship.

Types of taxes in force in Poland

Tax residents of the country are both legal entities and individuals. Moreover, every person, regardless of citizenship, must pay taxes if he stays in Poland for more than 183 days a year.

In total, there are two categories of taxes in the country: direct and indirect. The first includes contributions to the following income:

• individuals;
• corporate (for CIT legal entities);
• received on account of inherited and donated property;
• from civil actions (CLAT);
• for the development of sites and the extraction of minerals;
• per tonnage for maritime transport.

Also included in this category are contributions, the rates of which are approved by municipal councils based on the Law on Local Fees. These include taxes on:

• real estate;
• motor vehicle;
• agricultural activities;
• forest.

In addition to these contributions, local communities have the right to impose various fees: from market to advertising.

Indirect taxes include:

• VAT or VAT;
• excise duty;
• on games in which bets are accepted both in cash and in kind.

Direct taxes

Personal income tax (PIT) falls under this category. Its size depends on the amount of income. If it does not exceed 85528 ​​PLN, then the rate of 18% is applied. With higher incomes, the rate increases to 32%. It is calculated minus the non-taxable minimum of PLN 556.02. Spouses can pay jointly. In this case, the amount falling under 18% is doubled and amounts to PLN 171056. An application for payment is submitted to the accounting department of the enterprise where one of the spouses works.

The tax-free annual income is PLN 3091, but this does not exempt a person from submitting a declaration to the tax authorities for the past reporting period.

In addition to the tax on individuals, every working citizen of Poland has social insurance contributions (ZUS) withheld from his salary every month. These include:

• pension;
• medical;
• in case of disability.

Their rates are subject to adjustment, and according to statistics for 2015, they are 19.52%, 8% and 2.45% respectively. Pension insurance is paid equally by the employee and the employer. The employer is also charged with accident insurance and medical care is the responsibility of the employee.

Corporate tax (for CIT legal entities) is also direct. It is paid by a citizen, regardless of whether he is a resident or not. The difference is that a non-legal entity pays tax only on profits received from sources located in this country. All other contributions are the same for all citizens. The main taxes for legal entities are the following:

• on profit, which is calculated according to the standard tax base at a rate of 19%;
• VAT or value added, may have a rate of 5% for groceries and prepared food, 8% for passenger transportation, hospitality services and the purchase of medicines, 0% for social groups of products and services (dairy products, medical, banking, postal and insurance services)
• excise tax on petroleum products, alcohol and cigarettes, electricity and cars with an engine capacity of over 2000 cm³, in total 33 positions fall into this category.

Excise tax on fuel is collected with special care in the country. It is PLN 1.54 per 1 liter of motor gasoline.

Legal entities engaged in entrepreneurial activities in such industries as are exempted from income taxes:

• forest;
• Agriculture;
• per tonnage.

When calculating the amount of the contribution, the legislation allows up to 50% deductions from the company's tax base for the purchase of advanced equipment and technologies, as well as a certain part for charity.

Funds received from the sale of securities and other sources of capital gains are taxed at 19%. The same rate applies to entities engaged in economic activities not related to agriculture and the sale of real estate.

The most attractive form of business in Poland - Spółka z oo (Ltd)

A limited liability company can be organized even by a non-resident if he has a passport. At the same time, both his personal participation in the process and a trusted person are allowed if there is an appropriate, notarized document. However, there are some restrictions. Thus, a legal entity cannot be the sole founder of a company. When registering a company, it is necessary to indicate both the main and related activities (at least 9).

To open a company, an authorized capital of about 1100 euros is enough. You can not deposit it to the account of the LLC during registration, but limit yourself to a signed declaration. The tax burden can be significantly reduced if the company has several founders. At the same time, their citizenship does not matter, since in Poland the tax rates for foreigners and local residents are the same.

There are some restrictions when creating an LLC in certain areas of activity. The organization of such a business in the banking and insurance systems, pension fund or financial market is possible only with a license.

Some types of activities are only allowed with permission from government agencies or after confirmation of the relevant qualifications.

A newly created company will be able to start working immediately after entering data about it in the register and assigning a special identification number.

As for the taxes paid by an enterprise with the form of ownership of an LLC, they are similar to those existing in other EU countries. These include:

• CIT or income tax;
• VAT or VAT.

However, in case of unprofitability of the enterprise, a decrease in profit by up to 50% of annual losses is allowed.

The tax period in Poland, like in other countries, corresponds to a calendar year, and reports are submitted monthly or quarterly.

Who is eligible for a VAT refund?

VAT refund, which is included in the price of goods, according to Polish law, is possible only for tourists who are not citizens of countries that are members of the European Union. To get this tax refund, you need to make a purchase in excess of PLN 200 (excluding VAT). But this rule applies only to goods purchased at points of sale designated as TAX FREE. At the same time, you need to clarify in advance whether the store issues a document for a tax refund and familiarize yourself with the rules for obtaining it, which the distribution network must provide in Russian.

The packaged goods should be presented to the customs officers within three months from the date of purchase. When crossing the border at the checkpoint, the responsible person puts a stamp and signature on the check. The buyer must present this document in a Polish store or upon returning to his country in order to receive VAT within 10 subsequent months.

Responsibility of taxpayers

If you are going to open a branch or organize your own business in Poland, you must take into account that tax concealment can lead to administrative and even criminal penalties. But this approach is not an end in itself, therefore, in most cases, the tax authorities achieve debt repayment using the following sanctions:

• deprivation of existing benefits;
• charging interest on overdue payments;
• change in the tax base and the inclusion of additional obligations in it.

In case of concealment of a large amount of income, these sanctions can be applied together with the punishment provided for by the Criminal and Financial Code of Poland.

Tax system and business

To avoid double taxation, an agreement was signed with 92 countries of the world. The Convention between governments describes in detail both the methods of taxing all categories of income of citizens, and the features of the exchange of information to prevent evasion and in order to optimize the payment of mandatory contributions.

In general, the Polish tax system is considered favorable not only for large, but also for small businesses. That is why, in recent years, private business owners from the post-Soviet space have rushed to this country. However, the search for a free niche for business here has its own characteristics. To avoid losses and achieve business prosperity, it is necessary to conduct a thorough analysis of the economic situation in the industry of interest before investing in production.