Changes in the ‘Estonian CIT’ in 2023

Changes in the ‘Estonian CIT’ in 2023
Jakub Chajdas

Jakub Chajdas

Partner / Attorney-at-law

Estonian CIT in Poland is a corporate tax which assumes that when a company doesn’t pay out its profits, it doesn’t have to pay income tax. What changes is the legislator planning for the Estonian CIT in 2023?

Estonian CIT in Poland- the most important changes in 2023

As of the 1st of January 2023, a number of changes concerning the Estonian CIT are coming into effect. Their goal is to facilitate the use of this form of taxation and to encourage people to benefit from it. Here are the most important ones:

  • New date by which the taxpayer must notify the tax authority of introducing Estonian CIT. From 2023, one will be able to do so until the end of the first month of the tax year in which the Estonian CIT is applicable.
  • The employment condition will also be met in the case of employment under agreements other than employment contracts. This applies to persons exempt from PIT tax, or from social and health insurance.
  • The liability for the so-called initial adjustment will expire after at least one full tax period. This corresponds to four tax years.
  • Change in the tax base for a lump-sum. The tax base of the lump-sum will be the sum of income from distributed profit and income from profit intended to cover losses. It must be identified in the year in which the resolution on the distribution or coverage of net financial result was adopted.
  • If taxpayer obtains an income from net profit and allocates it in the period following the end of the lump-sum tax application period, he may pay out the lump sum on the value of the allocated income. This can be done by the end of the third month of the tax year following the year in which he made this disposition.
  • Change in the payment of a lump sum on income from distributed profit and income from profit intended to cover losses. From January, the taxpayer must pay by the end of the third month of the tax year. This refers to a period following the year in which the resolution to distribute or cover the net financial result was adopted. As a reminder, until now he could do that until the 20th day of the seventh month of the fiscal year. The situation is similar in the case of a lump sum on allocated income from net profit.

What will be the result of the changes?

The legislator’s idea was to encourage the use of benefits offered under the Estonian CIT. Will it be successful? Let us remind you that the last amendment took place at the beginning of 2022. The legislator still verifies this solution to improve it for the entrepreneurs. The planned changes are certainly a step in the right direction.

Information on Estonian CIT, including conditions that must be met to use it, can be found in our article: Estonian CIT.

Do you need more information? Are you wondering how the changes in Estonian CIT will affect your current business? Do not hesitate to contact us!

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