When does the 9% CIT rate apply?

Taxpayers in Poland are subject to either a 19% or 9% CIT rate. The lower 9% rate is applicable for:

• Taxpayers starting a new business;
• Businesses with the previous year’s sales revenue below EUR 2,000,000 (in 2023, this applies if 2022 sales revenue fell within the PLN 9,654,000 limit).

If a taxpayer’s current income reaches €2 million during the year, the standard 19% rate applies to the entire year’s income, not just the portion exceeding the limit.

The reduced 9% rate can be applied to Polish company limited (sp. z o.o.)

The lower 9% CIT rate can be applied to Polish company limited (sp. z o.o.), but it does not apply to capital gains.

Advance tax payments in Poland

Businesses in Poland must compute and pay monthly income tax advances. After each month, the income should be calculated and an advance tax paid based on the applicable rate (9% or 19%).

The 9% CIT rate can be used for advance tax payments even if the eligibility is determined after the tax year ends. If the revenue limit of EUR 2 million is exceeded, the taxpayer must calculate advance payments at the 19% rate starting in the month the excess occurs. The 9% rate no longer applies, and the 19% rate is applied to the entire fiscal year’s income.

Adjusting advance tax payments after exceeding the turnover limit

 

Tax authorities state that taxpayers are not required to adjust monthly advances paid from the beginning of the year until the limit is reached. Upon reaching the limit, advances at the 19% rate must be paid, covering the difference between the tax payable on income since the start of the year and the sum of advances due for previous months at the 9% rate.

 

Key takeaways:

1. Polish Corporate Income Tax is 9% unless income reaches €2 million during the year;
2. The reduced 9% rate can be applied to Polish company limited (sp. z o.o.);
3. Monthly advance tax payments are required, with adjustments made after exceeding the turnover limit.