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Tips for doing business in Poland

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EU funds available for business in Poland until 2020

Between 2014 and 2020, Poland will receive EUR 82 billion from EU funds to implement the EU strategy “Europe 2020.” Of this amount, more than EUR 15 billion is available for entrepreneurs to co-finance projects, such as research and development or developing commercial enterprises in Poland, that are aimed at developing an innovative and balanced economy.

Special economic zones

To attract new investments and create new workplaces, there are 14 Special Economic Zones (SEZ) established in Poland where the investors may obtain special incentives, the most important of which is exemption from income tax. In some zones, additional exemption from local real estate tax is also available. The minimum amount of investment to qualify for the incentives is EUR 100,000.

Tax environment in Poland

Poland has a taxpayer-friendly environment with an efficient system of binding tax rulings. Rulings can be procured in almost every tax matter within four months, even for future companies that do not exist yet. Polish tax settlements are open for tax audit unless barred by statute of limitations (principally, five years from the end of calendar year when tax became due) or closed with a decision from the tax authorities.

Specifically, Polish taxes that should be taken into consideration in the investment process include the following.

TaxPolish tax rateComments
VATStandard: 23%
Reduced: 8%, 5%, 0%
Polish VAT is in line with the EU regulations; No VAT grouping; Settlement period: month or quarter
Corporate income tax19%Tax loss may be carried forward for five tax years; CIT grouping available; CFC rules since 2015
Withholding tax on:
Dividends, Interest, royalties and some service fees
19%
20%
20%
Exemptions or tax rate reductions may apply based on the EU Directives or Double Tax Treaty.
Employee’s personal income tax 18% on first PLN 85,528
32% on excess
Note: Employer co-finances social security. (Usually that cost equals to 20.6% of the gross salary.)
Real estate tax Depends on the decision of the local community Charged on land, buildings and some constructions

Transfer pricing

Poland is an OECD member state and the Polish transfer pricing regulations follow the OECD approach. The prices agreed between related parties should be determined at market level. In case of transactions with related parties (including partnership activities since 2015), taxpayers are obliged to report this fact to the tax authorities in an annual tax declaration and prepare detailed transfer pricing documentation. Advanced Pricing Agreements are also available.

Adrian Branny is a general director at SCHNEIDER GROUP Poland. Contact him at BrannyA@schneider-group.com or visit www.schneider-group.com.