Value Added Tax
The Polish Value Added Tax Act together with its secondary legislation govern the tax on goods and services issues.
The Act lays down the fiscal requirements concerning goods and services.
Scope of Taxation
The following are subject to VAT: chargeable delivery of goods and provision of services in Poland, export of goods, import of goods, intra-Community acquisition of goods for remuneration in Poland, and intra-Community delivery of goods.
As a rule, the turnover, meaning the receivables from sales less the due tax, is the tax base.
Legal persons, unincorporated organisations and natural persons who run businesses regardless of their purpose or results are taxable persons.
Level of taxation
Until the end of 2010, the basic VAT rate was 22%; there was also a reduced rate of: 7% and 3% (for foodstuffs) and 0% (for books and magazines). As of 1 January 2011, the basic VAT rate will be 23%; there is also a reduced rate of 8% and another reduced rate of 5% (for food and books). Raising the basic rate to 23% and the reduced rate of 8% is a temporary measure (3 years).
The Tax Ordinance sets out general rules for paying taxes.
Income tax as applicable to businesses is regulated by the following acts:
Corporate income tax is paid by:
- legal persons;
- unincorporated organisations;
- tax groups of companies;
- companies whose registered office or board is registered in another country; under certain conditions and in accordance with the tax regulations of that country.
Corporate taxpayers pay tax only on income earned in Poland if their registered office or board is not registered in Poland.
All natural persons, including partners in partnerships and private partnerships, pay income tax. Natural persons who are not Polish residents are only subject to tax on income (revenue) earned in Poland (limited tax obligation).
Revenue earned on the territory of the Republic of Poland shall be deem in particular the revenue on:
- work performed in Poland on the basis of an employment relationship, service relationship or cooperative employment relationship, irrespective of the place where remuneration is paid;
- activity performed personally in Poland irrespective of the place where remuneration is paid;
- business activity performed in Poland;
- real estate located in Poland, including sales of such real estate.
Income is subject to tax irrespective of the place where income is earned. Income means revenue less tax deductible expenses in a given tax year.
In case of corporate taxpayers whose registered office or board are not in Poland, when it is not possible to determine their income on the basis of the accounting data, the income is estimated using an income index in relation to revenue, which is 5% for retail and wholesale trade and 10% for construction and transport services.
Corporate income tax rate is 19%.
In case of entrepreneurs who are natural persons 18% or 32% tax rate is applied for a threshold of PLN 85,528 or 19%. In certain cases an undertaking can decide on one of the forms of lump-sum income tax: lump-sum tax on recorded revenue or flat rate tax.
Taxation of natural persons
All natural persons, including partners in partnerships and private partnerships pay income tax. Natural persons who are not Polish residents pay tax on income earned only in Poland (limited tax obligation).
In some cases, businesses are required to pay other taxes and local fees, which are a source of revenue for local authorities. In case of taxes on property and means of transport, local authorities have the right to set rates and the relevant relief for these taxes, including tax reliefs that are part of programmes supporting businesses.
Information about current tax rates and reliefs in a given location can be found on the websites of the relevant local authorities.
The Local Taxes and Fees Act governs the property tax.
Tax on means of transport
The tax levied on means of transport is also governed by the Local Taxes and Fees Act.
Tax on civil law transactions
Tax on civil law transactions is governed by the Tax on Civil Law Transactions Act.
Submission of tax returns
Companies can submit VAT and tax declarations electronically. This option is open to those companies which have an electronic signature and submit the appropriate application form for sending returns electronically.
Taxpayers do not have to submit income tax returns during the tax year in which they are obliged to pay tax advances.
Taxpayers who are legal persons must submit tax returns stating the level of income (or loss) achieved in a tax year by the end of the third month of the following year. Within this period, they must also pay tax due or the difference between the tax due on the income as indicated in their tax return and the tax advances from the beginning of the year.
Taxpayers who are natural persons must submit tax returns for a given tax year by 30 April of the following year. For taxpayers who pay tax in the form of a lump-sum calculated on recorded revenue the deadline is 31 January of the following year.
Systems of paying income tax advances
Taxpayers pay advances monthly; small taxpayers and taxpayers who start a business can pay taxes quarterly.
During the tax year, taxpayers can take advantage of a simplified system of paying tax advances based on monthly payments of 1/12 of the amount of tax due.
Small taxpayers and taxpayers who start a business can pay tax advances quarterly.
Taxes that are not paid within the deadline become tax arrears, on which statutory interest is charged from the first day after the payment deadline.
When arrears are paid after the deadline, companies must calculate interest due and pay the tax arrears as well as the interest due. Statutory interest is currently 15% per annum.
Appealing against tax decisions
Tax proceedings are a two-instance process.
Appeals against decisions of tax offices (tax authorities of first instance) can be lodged with directors of tax chambers. Second-instance rulings are final. Appeals against them can be lodged with administrative courts.