Doing business in Poland is becoming more and more difficult every year. Rising prices, inflation and constant changes in regulations are the reasons that force many entrepreneurs to close their businesses. Below we present the most important changes effective from 2023. We will also discuss tax preferences that entrepreneurs in Poland can use.
Table of Contents
- Doing business in Poland – tax incentives
- Doing business in Poland – significant changes in 2023
Doing business in Poland – tax incentives
1. IP BOX
IP BOX relief is deducted from the tax base. It creates the opportunity to benefit from a preferential 5% tax rate. It refers to income from intellectual property rights that are subject to legal protection and have been created, developed or improved as part of the research and development activities conducted by the taxpayer. The catalogue of rights covered by the IP BOX relief is closed.
To benefit from the IP BOX relief, you should:
· identify your intellectual property rights,
· assess whether they were produced by the taxpayer as part of research and development activities,
· calculate the so-called qualified income from intellectual property rights,
· determine the tax base for the preferential IP BOX relief rate. It represents the sum of all qualified rights.
As a result of the changes introduced last year, it is now possible to combine the IP BOX and the R+D relief.
R+D relief is a tool that aims to stimulate the growth of innovation of businesses conducted in Poland. The essence of the R+D relief is the possibility of deducting expenses related to research and development from the tax base.
The R+D relief may be used by entrepreneurs subject to taxation according to:
· tax scale,
· flat tax,
· corporate income tax.
From 2023, taxpayers have the opportunity to use a new preference. It complements the R+D relief. In practice, it consists in reducing the amounts of income tax advances collected from salaries of persons engaged in research and development works by the unused part of the R+D relief. The most important condition for applying this relief is that the employee (or contractor) performs R+D activities. Moreover, it must be done for at least half of his entire working time.
3. Estonian CIT
Estonian CIT is the lump-sum tax on company income. It is a preferential system of corporate income tax on companies. When choosing Estonian CIT, the company doesn’t have to pay income tax until the profit is distributed to the shareholders. The tax obligation arises only when the profit is distributed and allocated for payments to shareholders.
To switch to lump-sum CIT, a company must now meet the following conditions:
· the partners must be natural persons,
· The company must reach a minimum level of employment.
From January 2023, the second of these conditions has been eased. It is allowed to fulfill it by contracts other than an employment contract.
· the deadline for notifying the tax authority about the switch to Estonian CIT is stated,
· it is determined that the tax liability will always occur until the end of the first quarter of the next tax year,
· the rules for qualifying expenses not related to running a business in Poland have been changed.
4. Polish Investment Zone
The Polish Investment Zone is a support instrument for people doing a business in Poland. It was introduced by the Act on Supporting New Investments of 2018.
On 1 January 2023, the Regulation of the Council of Ministers on state aid granted to certain entrepreneurs for the implementation of new investments came into force.
The regulation aims to clarify the Act on supporting new investments by introducing following changes:
· Maintaining the reduction of the entry threshold to the Polish Investment Zone. The reduction (by 50%) of the minimum investment expenditures required for entrepreneurs pursuing specific types of initial investment has been extended. Micro and small entrepreneurs can now also benefit from re-education.
· New rules for settling the aid. A regulation has been introduced according to which support is granted to an entrepreneur conducting business in Poland only from the month in which the deadline for completing the investment specified in the decision on support expires, until the decision on support expires or the maximum allowable regional aid is exhausted
· Changes in quality criteria – some of the provisions of the Act have been clarified. For example, it is indicated that the criterion for the creation of RES installations will be met if the new investment covers the creation of RES installations with a capacity ensuring at least 15% of the average annual electricity consumption in the company. Furthermore, the issue of the period of maintaining new job positions has been regulated.
Doing business in Poland – significant changes in 2023
1. Summary of changes in tax law
The beginning of 2023 is connected with numerous changes in tax law for people running a business in Poland.
Among the most important ones, there are:
· No depreciation of residential premises. Taxpayers who rent residential premises as part of their business in Poland can no longer depreciate them. From 2023 they cannot include depreciation write-offs as tax-deductible costs.
· New tax scale – from 2023, the tax rate in the first tax threshold is 12% up to 120,000 PLN. It amounts to 32% on the surplus over 120,000 PLN.
· New rules for submitting statements to income tax bearers. From 2023, taxpayers submit all statements and applications to tax bearers in writing. Or alternatively, in another manner adopted by a given tax bearer.
· New rules for taking into account the tax-free amount. In 2023, the tax bearer is obliged to reduce income tax advances by an amount that is no more than 1/12 of the amount reducing the tax, if the employee submits to him a statement on the reduction,
· Application for not collecting advance payments in a tax year. From 2023, the catalogue of types of revenues that entitle to applying for not collecting advance payments has been extended.
2. Minimum remuneration in Poland in 2023
The minimum remuneration plays a significant role in reducing income inequality. It also protects employees from working below set rates.
In 2023, the minimum wage increased to 3,490 PLN. This means 480 PLN more than in the previous year. Consequently, the hourly rate is currently 22.80 PLN.
Entrepreneurs having business in Poland should remember that this is not the end of changes. From 1 July 2023, the minimum wage will increase to 3,600 PLN. This means an increase by 590 PLN compared to last year. The hourly rate will increase to 23.50 PLN.
|Minimum wage||Hourly rate|
|From 1 January 2023||3 490 gross PLN||22.80 PLN gross|
|From 1 July 2023||3 600 gross PLN||23.50 PLN gross|
3. Polish Family Foundation
The work on the Act on the Family Foundation took several years. On 26 January 2023, the Sejm submitted the act to the President of Poland to obtain his signature.
The idea of a family foundation is based on the formal separation of business and family. It is intended to serve as a family treasury. The purpose of a family foundation is to provide the family with financial resources, implement the founder’s vision and take care of the values adopted by him. A family foundation is therefore a means to an end. Its goal is to run a business in Poland for generations.
The advantages of a family foundation include:
· the possibility of the founder’s withdrawal from active business in Poland without losing income,
· financial security of family members,
· separation of business and family matters,
· protection of property,
· effective asset management,
· planning the succession in the perspective of many generations
Running a business in Poland is quite a challenge. The legislator knows that. This is why he constantly proposes new solutions to support entrepreneurs. Such solutions include numerous tax reliefs, the creation of the Polish Investment Zone or a family foundation. Moreover, the legislator ensures the protection of workers through the annual regulation of a minimum wage.
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