Many employers in Poland provide Christmas bonuses as a gesture of appreciation and goodwill to their employees. Alongside (or instead of) traditional cash bonuses, some employers offer gift vouchers or physical gifts like holiday baskets at Christmas.

In this article, Leinonen will explore the culture and expectations around Christmas bonuses in Poland, and discuss the impact of providing bonuses on accounting, tax and payroll in Poland.

Why Offer Christmas Bonuses in Poland?

Research shows that employees in Poland value Christmas bonuses and gifts; in 2024, research by Pracuj.pl found that 86% of employees would like to receive a one-time Christmas financial bonus, and 36% would appreciate a gift from their employer.

The same study found that more employees expected to receive a holiday bonus in 2024 versus 2023, suggesting that more Polish companies may be opting to provide Christmas bonuses in recent years.

While meaningful, personalised cash and non-cash rewards can boost employee morale and performance, it is vital to maintain compliance with tax and labour regulations when providing Christmas bonuses in Poland.

What are the Legal Definitions for Bonuses and Non-cash Gifts?

According to Polish labour law, bonuses are generally classed as additional remuneration, which means they are subject to standard payroll rules. On the flipside, non-cash gifts may be treated as benefits in kind.

Gifts Financed by the Company Social Benefits Fund (ZFŚS)

Non-cash gifts financed by ZFŚS may be treated differently under labour and tax law; if properly documented, they often qualify for exemptions.

ZFŚS is typically used to provide employee benefits like:

• Cultural and educational activities
• Sports and recreational activities
• Childcare services (e.g., daycare, nannies)

Taxation of Cash Bonuses and Non-cash Gifts in Poland

Cash Bonuses

Cash bonuses in Poland are treated as regular income. This means that, like standard salary payments, they are subject to Personal Income Tax (PIT) and social security contributions (ZUS).

Non-cash Gifts

Non-cash gifts are also subject to PIT and ZUS in most cases, though there are a few exceptions. Gifts financed from ZFŚS may be exempt from PIT and ZUS contributions up to PLN 1,000 annually.

To qualify for this exemption, a gift must be:

• Occasional
• Entirely funded by ZFŚS
• Not part of regular remuneration
• Not funded by regular company resources

Accounting Rules for Christmas Bonuses in Poland

How Should Bonuses and Non-cash Gift Expenses be Recorded in Accounting Books?

• Cash bonuses should be recorded under payroll expenses
• Non-cash gifts can sometimes be posted under employee benefits or other operating expenses, depending on the nature of the gift
• Expenses financed from ZFŚS should be recorded separately under social fund expenditures in accordance with fund regulations and accounting standards

Are Christmas Expenses Deductible for Corporate Income Tax (CIT) Purposes?

As long as they are properly documented and related to employee benefits, Christmas related expenses are usually deductible for CIT purposes. However, expenses financed by ZFŚS are not deductible for CIT. This is because the fund itself is not part of the company’s taxable income.

Payroll Considerations for Christmas Bonuses in Poland

Bonuses can be processed within the regular payroll run, but some companies prefer to handle them separately for increased clarity and easier tracking. Bonuses financed from ZFŚS must be processed on a separate payroll list to ensure proper classification and compliance with fund regulations.

Recommended Timeline

It is recommended that companies calculate and disburse bonuses by mid-December. This helps ensure timely payroll processing and compliance with reporting deadlines.

Supporting Documentation

The following supporting documentation should be provided:

• Payroll lists
• Internal bonus policies or regulations
• Proof of disbursement

For non-cash gifts, the following may also be required:

• Invoices
• Distribution lists

For ZFŚS funded gifts, the following must be provided:

• Fund approval
• Employee eligibility criteria
• Distribution records in accordance with ZFŚS policies

Reporting Obligations

Bonuses must be reported through standard payroll channels, including PIT-11 and ZUS RCA forms. ZFŚS funded benefits must be reported separately if they exceed exemption thresholds, or if they do not meet the criteria for tax free treatment. Incorrect classification or late reporting may result in penalties from tax authorities or ZUS, including interest on unpaid contributions.

Important Things to Consider When Organising Christmas Bonuses in Poland

Bonuses in January Instead of December: What are the Implications?

Paying bonuses in January shifts the tax liability to the following year, which can affect tax planning for both the employer and the employee.

Cash vs. Non-cash Rewards: Which is Better for tax and Payroll in Poland?

Cash and non-cash rewards are both popular choices for companies in Poland. Each option has its own pros and cons, as summarised below.

Leinonen: Helping Foreign-owned Businesses in Poland Manage Christmas Bonuses

Understanding tax and payroll regulations surrounding Christmas bonuses in Poland can be confusing and time consuming for foreign-owned businesses, but staying compliant is essential to avoid costly penalties. For more than 17 years, Leinonen’s local accounting experts have provided vital tax and payroll support for 80+ foreign-owned businesses in Poland.

Provide the Christmas bonuses your employees deserve with confidence – consult with a Leinonen Poland expert for unparalleled local expertise.

The post Christmas Bonuses in Poland: Tax, Payroll and Accounting Implications appeared first on Leinonen Poland.

Poland is an attractive destination for foreign-owned businesses looking to expand, and choosing the right business entity in Poland will set your company up for operational success, tax efficiency, and compliance from the outset.

In this article, Leinonen experts will explore Poland’s main business entities, comparing their impacts on accounting, tax, and more for foreign-owned businesses in Poland.

Main Legal Entities in Poland

• Sole proprietorship (Jednoosobowa działalność gospodarcza / JDG)
• Civil law partnership (Spółka cywilna)
• Registered partnerships (Spółka jawna / Sp.j.)
• Professional partnerships (Spółka partnerska / Sp.p.)
• Limited partnership (Spółka komandytowa / Sp.k.)
• Limited joint-stock partnership (Spółka komandytowo-akcyjna / S.K.A.)
• Limited liability company (Spółka z ograniczoną odpowiedzialnościa / Sp. z o.o.)
• Joint-stock company (Spółka akcyjna / S.A.)
• Simple joint-stock company (Prosta spółka akcyjna / P.S.A.)
• Branch of a foreign company
• Representative office

What are the Most Commonly Used Business Entities in Poland?

Limited liability company, sole proprietorship, joint-stock company, and branch of a foreign company/representative office are the most popular business entities in Poland.

• Limited liability company is a business entity in Poland that is highly favoured among both local and foreign investors, thanks to its liability protection and low capital requirement. Overall, limited liability companies offer the best balance of protection, credibility, and flexibility.
• Sole proprietorship is generally favoured by freelancers and small businesses due to its low cost and simplicity, but it can be risky for larger or more unpredictable ventures due to its unlimited liability.
• Joint-stock company tends to be used by large enterprises, especially those seeking public listing or significant capital raising.
• Branch and representative office are used by foreign-owned businesses looking for entry into the Polish market without full incorporation. Fast market entry is possible with a branch, but the parent company holds liability. Representative offices are low cost, but cannot trade (marketing and promotion only).

Formation Procedures for Legal Entities in Poland

Limited Liability Company

Setup can be completed online using the S24 system if contributions are made only in cash (typically this takes 1-5 days). However, a notarial deed is usually required, which takes 1-2 months. Articles of association, proof of capital, IDs, and a local address should be provided for registration. Costs include a registration fee of PLN 250-600, notary fees if applicable, and optional legal fees.

Sole Proprietorship

An individual can register for sole proprietorship online through the Business Activity Central Register and Information Record System (CEIDG) within 1-3 days. Registration is free, so costs are kept minimal, and articles of association are not required.

Joint-stock Company

To set up a joint-stock company, registration in the National Court Register (KRS) is required, and articles of association must be authenticated by a notary. The cost of forming a joint-stock company can be higher due to notarial and publication requirements, and the process usually takes 2-6 weeks.

Branch of a Foreign Company

A branch of a foreign company acts as an extension of a foreign-owned business in Poland. KRS registration is required, and a local address and parent company documents must be provided. The cost of setting up a branch is similar to setting up a limited liability company, and typically takes 2-4 weeks in total.

Representative Office

A representative office is limited to promotion and marketing, and must be registered with the Polish Ministry of Development. It costs less than registering a branch or company, and usually takes 2-4 weeks.

Capital and Ownership Requirements for Business Entities in Poland

Tax in Poland for the Main Legal Entities

Corporate Income Tax and Personal Income Tax

Business entities in Poland may be subject to Corporate Income Tax (CIT), Personal Income Tax (PIT), and Value Added Tax (VAT), depending on the company form and size.

For example:

• Limited liability companies and joint-stock companies are subject to CIT at a rate of 19% (or 9% for small taxpayers)
• Partnerships are generally tax transparent, with profits being subject to single taxation at partner level
• As sole proprietorships are comprised of one owner/operator, profits are classed as personal income and are therefore subject to PIT – either at progressive rates of 12% or 32%, a flat 19%, or a lump-sum for certain activities
• Branches are taxed as a non-resident entity at 19% CIT on Polish sourced income (or 9% for small taxpayers)
• Representative offices are limited to promotional and marketing activities and therefore do not generate income subject to CIT

Value Added Tax

Companies in Poland are required to register for VAT when turnover exceeds PLN 200,000 per year, but there is no minimum threshold for foreign companies. The standard rate of VAT in Poland is 23%.

Dividend Tax

For limited liability companies and joint-stock companies, profits are taxed at company level (CIT), then at shareholder level (Dividend Tax). Profits distributed as dividends are subject to 19% Withholding Tax (which may be reduced by EU parent-subsidiary directives or treaties).

Audit and Accounting Requirements for Legal Entities in Poland

Limited Liability Companies and Joint-stock Companies

Limited liability companies and joint-stock companies are required to keep full accounting books and prepare annual financial statements.

If at least two of the following conditions were met in the previous year, audit is also mandatory:

• Assets in excess of EUR 3,125,000
• Revenue in excess of EUR 6,250,000
• Average employees in excess of 50

Sole Proprietorship and Small Partnerships

Sole proprietorships and small partnerships can use simplified accounting, providing their revenue does not exceed EUR 2 million.

Branches and Representative Offices

Full accounting is required for branches, but minimal reporting is needed for representative offices. This is because they are restricted to marketing and promotional activities.

Legal and Operational Considerations

Most legal entities in Poland can engage in any lawful business and hire staff. The main difference is representative offices; these entities are limited to promotion and marketing and cannot hire staff. Branches can employ locally.

In a limited liability company or joint-stock company, shareholders’ liability is limited to their capital, but sole proprietors and general partners within partnerships have unlimited liability.

Choosing a Legal Entity in Poland

Choosing the right legal entity is a crucial step towards establishing a successful presence as a foreign-owned business in Poland.

Here are a few key questions to ask yourself:

• Do you want to attract investors? Limited liability companies and joint-stock companies are typically the most attractive company forms to investors.
• Do you want to attract foreign investors? A limited liability company or branch could provide the operational flexibility and limited liability you need.
• Do you want to limit your liability? Consider choosing limited liability company or joint-stock company.
• Is the business a joint venture? Depending on risk and tax planning, limited liability company or a partnership may be best.

Every foreign-owned business in Poland is unique, and the above are just a handful of scenarios to consider. For truly tailored advice on selecting the best business entity in Poland, it is vital to consult with an accounting and tax specialist like Leinonen Poland.

Recent Developments Affecting Legal Entities in Poland

A number of recent developments and incentives have been introduced that impact foreign-owned businesses in Poland.

Mandatory Audit Thresholds

In January 2025, thresholds for mandatory audit were changed as follows:

• Total balance sheet assets threshold was raised from EUR 2,500,000 to EUR 3,125,000
• Net revenue on sales of goods and products was raised from EUR 5,000,000 to EUR 6,250,000

Digitalisation

Like many EU countries, Poland is gradually digitalising its accounting and online registration systems. For example, the rollout of KseF is set to begin in 2026 starting with large taxpayers. This will introduce convenient and streamlined e-invoicing for businesses, and help prevent common issues like missing paper invoices.

What is the Most Popular Legal Entity for Foreign-owned Businesses in Poland?

In some countries, foreign businesses find setting up a branch to be an ‘easier’ option, but this is not the case in Poland. Most foreign-owned companies in Poland opt to set up a limited liability company; this choice offers greater independence and better legal protection.

A limited liability company can also help a business build a stronger local presence for a greater chance of success in the Polish market. Branches are generally only used when a parent company wishes to avoid creating a separate legal entity, or needs quick market entry.

Pinpoint the Right Legal Entity for Your Business With Leinonen Poland

While limited liability company remains the most versatile and popular legal entity, the right choice for your foreign-owned business in Poland will depend on your specific goals and operational plans. Consulting with an expert in accounting and tax in Poland will allow you to make an informed choice, so you can feel truly confident in your decision going forward.

Leinonen Poland has been a champion for foreign-owned businesses in Poland for more than 17 years, providing diligent and tailor made support for more than 80 clients. Our experts will offer invaluable local expertise on key accounting, tax, and payroll issues affecting your cross-border company as you venture into the vibrant Polish market.

Ready to access the personalised expertise you need to choose the right legal entity for your foreign-owned business in Poland? Organise a consultation with a local Leinonen Poland expert today.

The post Choosing the Right Legal Entity in Poland: A Guide for Foreign-owned Businesses appeared first on Leinonen Poland.

This marks the beginning of KSeF 2.0, a major transformation in the invoicing process across Poland.

Key Dates and Requirements

• From February 1, 2026, all Polish entrepreneurs—regardless of business type or VAT status—will be required to issue and receive invoices exclusively in a structured format (XML) via KSeF.
• Large enterprises (with gross sales exceeding PLN 200 million in 2024) must comply starting February 1, 2026.
• All other entities will be required to comply from April 1, 2026.
• Until then, businesses may voluntarily use KSeF or continue with traditional invoicing methods (e.g., paper or PDF).

Please note: Readiness by February 2026 is essential, as failure to comply will prevent you from receiving purchase invoices. Once an invoice is sent to KSeF, it is considered delivered—no separate notification or acceptance is required.

What KSeF Covers—and What It Doesn’t

KSeF applies only to invoices. The following documents remain outside the system:

• Attachments (PDF, Word, Excel, etc.) such as protocols, statements, specifications, CRM data
  (Note: These will be embedded in the XML structure under a special node called “Zalacznik” rather than sent as separate files.)
• Fiscal receipts
• Debit/Credit notes
• Pro-forma invoices
• Internal documents (including internal invoices)
• Invoices from foreign entities
• Invoices issued to consumers (non-business individuals)

What This Means for Your Business

Implementing KSeF is not just an IT upgrade—it requires a comprehensive review and adjustment of your business processes. Failure to comply may result in invoices being deemed invalid, exposing your company to financial and tax-related risks.

You are required to:

• Adapt your accounting software to meet KSeF standards
  Leinonen is responsible for updating the Enova system for sending sales invoices and configuring Saldeo to retrieve purchase invoices from KSeF.
• Update internal procedures for issuing and receiving invoices
• Revise cooperation rules with business partners
• Update collaboration protocols with our Office, including document exchange and archiving processes

Next Steps

To use KSeF, each company representative must have either a trusted profile (Profil Zaufany) or a Polish certified electronic signature.

Additionally, you must register a main user (administrator) via the ZAW-FA form, who will be authorized to manage access rights within KSeF.

We will soon reach out with a proposal to update our current agreement to ensure our cooperation aligns with KSeF requirements.

For more information, please visit the Ministry of Finance’s official website: https://ksef.podatki.gov.pl/

Summary: KSeF Implementation and Procedures

1. ZAW-FA Form and KSeF Master

• The ZAW-FA notification is used to appoint the first person (KSeF Master) authorized to use KSeF for a legal entity.
• The KSeF Master manages permissions for other users within the entity.
• The ZAW-FA form is submitted in paper form to the tax office; some offices accept electronic submission.
• Proper documentation and procedures for managing permissions are required.

2. Foreign Companies and KSeF

• Foreign entities (outside Poland) continue to issue and send invoices as before, outside KSeF.
• Polish companies must issue e-invoices in KSeF for sales to foreign contractors (B2B), regardless of the recipient’s location.
• Sending an invoice to KSeF does not mean the foreign contractor has received it; a visualization (e.g., PDF with QR code) must be delivered separately.
• Delivery arrangements can be informal (email, website, terms and conditions).

3. Attachments and Supporting Documentation

• KSeF is only for VAT invoices; other documents (bills, receipts, contracts, attachments) are not handled by KSeF.
• Non-invoice documents continue to circulate as before (paper or electronic).
• Attachments to invoices must be sent outside KSeF, but can be supplemented with the KSeF invoice number (KSeF ID).
• Visualization (readable invoice with QR code) confirms the invoice is in KSeF.

4. When to Issue an Invoice in KSeF

KSeF does not change the deadlines for issuing invoices or the rules for identifying the moment of performance.

• The process of issuing invoices changes: invoices must be in electronic format (XML) and submitted to KSeF.
• Exception: invoices to consumers (non-business individuals) are not required in KSeF.
• All other invoices to entities with a NIP must be issued in KSeF, regardless of transaction type.
• Invoices must be submitted to KSeF on the same date as the invoice date, or no later than 24 hours after.

The post E-invoicing mandate in Poland appeared first on Leinonen Poland.

Poland is increasingly popular among companies looking to expand or establish a presence abroad. A skilled workforce, an increasingly stable economy, and improving infrastructure make business in Poland attractive. However, to succeed, you must navigate elements such as company formation, regulation, taxation, payroll, and compliance.

In this article, Leinonen Poland explains the basics you need to know about employment, payroll, and taxes in Poland.

Company Establishment in Poland

To guarantee easier market access and to gain trust in Poland, establishing a legal entity is recommended. Choosing which type of entity to form is a critical step, affecting taxes, liability, and ongoing compliance. While there are a whole host of (rarely used) options, the most common legal form among entities with foreign capital is a limited liability company (LLC).

Taxation in Poland

Corporate Income Tax (CIT) in Poland

As a standard, companies in Poland pay 19% CIT. However, certain conditions make some businesses eligible to pay a lower CIT rate of 9%.

This rate applies to:

• Small taxpayers whose annual revenues, including VAT, did not exceed EUR 2 million in the previous tax year (converted according to average National Bank of Poland exchange rate)
• Taxpayers starting a new business (for their first tax year in operation)

Value Added Tax (VAT) in Poland

The standard VAT rate in Poland is 23%, but there are four potential VAT rates for goods and services.

The following reduced rates are applicable to certain goods and services:

• 8% VAT is applicable to goods and services including (but not limited to) certain food products, newspapers and periodicals, animal feeding stuffs, and transport of passengers and accompanying luggage
• 5% VAT rate is applicable to basic foods, products for children and hygiene products, printed books, books on disks, tapes and other media, and e-books (with some exceptions)
• 0% VAT rate is applicable to services including (but not limited to) the intra-European supply of goods, international transport services, and the supply of goods to free zones or customs warehouses

Employment & Payroll in Poland

Employment in Poland is governed by the Labour Code. This applies equally, and must be complied with by both the employer and the employee.

Salary in Poland

The average gross salary in Poland is around PLN 8,962 per month. Minimum wage is PLN 4,666 per month, which equates to PLN 30.50 hourly.

Personal Income tax (PIT) in Poland

The amount of PIT an employee pays depends on the amount of income earned:

• Up to PLN 30,000 per year – no income tax payable
• Up to PLN 120,000 per year – 12% income tax
• Over PLN 120,000 per year – 32% tax

Social Security in Poland

Poland’s social security system consists of three main categories:

1. The Social Insurance Institution (ZUS)
2. Obligatory pension funds (OFE)
3. Voluntary pension funds

Overall, employers pay around 22.14% of the employee’s gross salary to social security contributions including pensions, disability insurance, accident fund, labour fund, Guaranteed Employee Benefits Fund, and Employment Capital Plans (PPK) fund. Employees pay around 13.71%, amounting to a total social security rate of 35.85%.

Special Economic Zones are widely used, and companies can be granted various tax benefits when investing in certain regions. Consulting local experts on tax in Poland will help you better understand these nuances.

Terminating Employment

There are three methods of terminating an employment agreement in Poland: termination by mutual consent, termination with notice, and termination without notice. Unless an employee is still on a probation period, a valid reason must be given for terminating the employment.

Non-Residents and Expats

Non-residents who work for a foreign-owned business in Poland that has a permanent establishment or fixed place of business in the country must pay tax on their income.

If the employer does not have a permanent establishment or fixed place of business in Poland, income tax must be paid once the employee has spent more than 183 days in total in the country.

Poland is an increasingly popular destination for expats. As part of the European Union (EU), the Polish labour market is open to all EU citizens. Many foreigners working in Poland operate fully under the Polish system, but other solutions are possible depending on country of origin. For example, if an expat can prove being under the social security of another EU country, payment of certain social costs (ZUS) can be avoided.

How Can Leinonen Support Your Business in Poland?

Setting up to do business in a brand new country can be confusing. If you are considering establishing your foreign-owned business in Poland, you need a local expert by your side. Drawing upon 17 years in Poland serving 80+ clients, Leinonen’s cross-border experts assist you with accounting, payroll, taxes, legal compliance, and company setup. We help you avoid common pitfalls, streamline operations, and ensure local regulations are followed right from the start.

Get in touch today to organise a consultation.

The post BUSINESS IN POLAND appeared first on Leinonen Poland.

In this article, trusted accounting, tax, and payroll experts from Leinonen Poland will explain the essentials. Covering everything from payroll and social security to employee benefits and working hours, we will help set your foreign-owned business in Poland up for long-term success.

Cost of Employment for Foreign-Owned Businesses in Poland

The total cost of employment in Poland includes several components aside from gross salary (the amount paid to the employee before any deductions). This includes social security contributions, Labour Fund, PPK fund, and more.

Social Security Contributions

Employers in Poland are required to contribute to various social security funds on behalf of their employees, and these contributions must be submitted to the Social Insurance Institution (ZUS) by the 15^th of the following month.

As a percentage of gross salary, these contributions are:

• Pension insurance – 9.76%
• Disability insurance – 6.5%
• Accident insurance (calculation based on number of employees and business sector) – typically 1.67%
• Labour Fund – 2.45%
• Guaranteed Employee Benefits Fund – 0.1%
• Employee Capital Plans (PPK) – 1.5% to 4% (depending on employee participation)

Contributions to pension and disability insurance are only paid up to the threshold of PLN 260,190 gross salary.

How is Accident Insurance Rate Calculated?

While employers with fewer than nine employees pay a flat rate of 1.67% for accident insurance, employers with nine or more employees may contribute a different rate. The rate ranges from 0.67% to 3.33%, depending on industry classification. However, it is important to note that foreign employers only pay the flat rate of 1.67%, regardless of company size.

Labour Fund and Guaranteed Employee Benefits Fund

Employers in Poland must also contribute to the Labour Fund and Guaranteed Employee Benefits Fund at rates of 2.45% and 0.10% respectively. These funds will provide unemployment protection and wage guarantees in case of insolvency.

Employment Capital Plans (PPK) Fund

Most employers are also required to provide an additional retirement savings plan under the Employment Capital Plans (PPK) fund, and should contribute a minimum of 1.5% of gross salary to this (with the option to increase contribution up to 4%).

State Fund for Rehabilitation of Disabled People

This contribution is paid by employers who fail to hire the required number of disabled employees (6% of staff for those with at least 25 full-time employees). The amount paid is 40.65% of the average salary for the number of employees that would bridge the gap between actual number of disabled employees and the number of disabled employees that would make up the 6%.

Example Cost of Employment Calculation

The following example demonstrates the potential cost of employment for a gross salary of PLN 5,000.

Employee Remuneration in Poland

Minimum Salary in Poland

In 2025, the minimum monthly salary in Poland is PLN 4,666 gross, with a minimum hourly rate of PLN 30.50 gross.

Income Tax in Poland

There are two basic income tax rates for employees in Poland:

• 12% rate if the tax base does not exceed PLN 120,000
• 32% rate if the tax base exceeds PLN 120,000

Overtime

Overtime work is allowed in special cases. It must be approved by the supervisor, and employees are entitled to additional compensation. The amount varies depending on whether the work is performed at night, on Sundays and public holidays, or on other days. In exchange for overtime work, employers may grant employees time off (the same amount of hours worked).

For overtime work, employees are entitled to the following in addition to their normal remuneration:

1. 100% extra remuneration for overtime work performed:
   • At night
   • On Sundays and public holidays which are not usual work days for the employee
   • On a day off work granted in exchange for work on a Sunday or public holiday
   • Where work exceeds the average 40 hour working week
2. 50% extra renumeration for overtime work performed in any other situation than the above.

Working Hours in Poland

Working Hours and Breaks

The standard working week in Poland is eight hours per day and 40 hours per week.

On any given day, employees are entitled to the following breaks:

• Those working at least 6 hours are entitled to one rest break of at least 15 minutes
• Those working more than 9 hours are entitled to an additional rest break (+15 minutes)
• Those working more than 16 hours are entitled to a further rest break (+15 minutes)

Public Holidays

Work on public holidays can only be performed in specific situations.

According to Article 151 of the Labour Code, these include:

• Where it is necessary to conduct a rescue operation to protect human life or health, property or the environment, or to remove a failure
• In continuous operations, in shift work, and during necessary repairs
• In transport and communication
• In company fire brigades and in company rescue services
• When guarding property or protecting people
• In agriculture and breeding
• When performing works is necessary due to social utility and everyday needs of the population

Employee Benefits and Tax Deductions in Poland

Employee Benefits

Employee benefits play an important role in Poland’s payroll tax system. Some benefits – like lunch coupons and eye glasses refunds – are not subject to social security contributions or income tax. Contributions to the Company Social Benefits Fund (ZFŚS) are also excluded from ZUS contribution calculations.

But other benefits like holiday pay, private medical insurance, life insurance, and sports activities are subject to taxation. Other employee perks (like gym memberships) are also taxed, but may be exempt from social security contributions.

For instance, prizes in the form of jubilee bonuses and gifts for important life events (up to a certain limit) are exempt from social security contributions. Some benefits are also taxable without ZUS contribution if the employee contributes to the costs.

Tax Deductions

Additional tax deductions are available in some circumstances and up to a certain income level.

These scenarios include:

• Single parents with children
• Large families with 4+ children
• Individuals who have recently relocated to Poland
• Young people up to 26 years old
• Working seniors
• Couples filing taxes together

Get Informed on Payroll in Poland With Leinonen

For 17 years, Leinonen Poland has been providing expert consulting on accounting, taxation and payroll in Poland. Our close-knit team of 25 financial experts is trusted by 80+ clients, and we specialise in equipping foreign-owned businesses in Poland with the tools and knowledge they need for long-term success.

Ready to meet your competent expert on accounting and payroll in Poland? Contact us today and speak to one of our consultants.

The post Payroll and Employment in Poland: Key Facts for Foreign-Owned Businesses appeared first on Leinonen Poland.

What is the Split Payment Mechanism?

When using the split payment mechanism (MPP), payments for goods or services are divided into two parts and transferred into designated bank accounts.

• The net amount is transferred into the seller’s account.
• The VAT amount is transferred into a separate VAT account, and money in this account can only be used for statutory payments.

Why Has the Split Payment Mechanism Been Extended?

The split payment mechanism in Poland helps counteract tax fraud by increasing the transparency of transactions. Poland was able to secure the extension after successfully demonstrating improved VAT collections and faster refunds of credits for taxpayers since the mechanism came into force in 2019.

Is the Split Payment Mechanism Mandatory?

The split payment mechanism in Poland can be used voluntarily, but in some cases it is mandatory. Split payment is compulsory for transactions exceeding PLN 15,000 for over 150 “high-risk” goods and services listed in Annex No.15 to the VAT Act.

These Include:

• Metal products
• Laptops and processors
• Recyclable materials
• Fuel for cars
• Construction services

What Is the Penalty for Not Using the Split Payment Mechanism in Poland?

Both sellers and buyers can be faced with penalties for improper split payment mechanism usage. If a seller of goods or services in one of the mandatory categories fails to specify “Mechanizm podzielonej płatności” (split payment mechanism) on an invoice, they will face a fine of 100% VAT. On the flipside, if a buyer does not pay using the split payment mechanism, they will also be handed a 100% VAT sanction.

How Can the Split Payment Mechanism in Poland Benefit Businesses?

All VAT taxpayers are included in the Ministry of Finance’s “white book of taxpayers”. Among other details, this book contains the correct bank account numbers of businesses registered for VAT in Poland. Businesses must be paid into the accounts listed, and face penalties for using unpublished bank accounts. Being able to verify bank account numbers against this database can help buyers establish trust in a seller.

Contact Leinonen for Support With VAT in Poland

By staying compliant with regulations surrounding VAT in Poland, your business can avoid problems and penalties in the future. Leinonen has been providing local expertise to 70+ small and large businesses in Poland for more than 15 years. Specialising in foreign-owned business, our tailor made services can give you the peace of mind that you are staying compliant with unfamiliar and ever-changing regulations.

Unsure how the split payment mechanism affects you, or need more advice on payroll, accounting, or tax and VAT in Poland? Connect with one of our local experts today.

The post Split Payment Mechanism: Extension, Uses, and Benefits for VAT in Poland appeared first on Leinonen Poland.

The National E-Invoice System: Revolutionizing Invoicing in Poland

The KSeF system stands as an innovative ICT platform designed to facilitate the issuance, reception, and archiving of structured invoices within Poland. It provides a framework for the seamless exchange of electronic invoices, particularly in the business-to-business (B2B) areas. Notably, the system is accessible free of charge for both B2B and business-to-government (B2G) transactions.

Introduced from 2022 on a voluntary basis, the KSeF system will transition into a mandatory solution by 2026, requiring compliance from companies of all sizes across Poland. Structured invoices within this system encompass specific information outlined in regulations and are stored in a designated electronic format, enabling easy extraction and processing of embedded data.

The Technical Nuances of KSeF and Challenges for Foreign Entities

However, as with any transformative shift, the implementation of KSeF presents a set of challenges, especially for foreign entities operating within Poland’s economic landscape.

Technical issues: The KSeF system may experience technical issues, which could cause delays or rejections of invoices.

Validation process: Each invoice will be validated by the KSeF from a technical perspective, and any technical mistake will result in rejection by the KSeF. This could cause issues for foreign companies that are not familiar with the KSeF system.

Scope of e-invoicing: The scope of e-invoicing will apply to activities that currently require documentation with an invoice issued in accordance with the Polish VAT Act. However, other activities may be included, such as services subject to VAT exemption. This could cause confusion for foreign companies that are not familiar with the Polish VAT Act.

Fixed establishment criteria: Foreign companies with a fixed establishment in Poland will be subject to mandatory e-invoicing. However, the fixed establishment criteria are controversial in the EU, and the Ministry of Finance plans to issue explanatory notes specifically on the fixed establishment criteria to help foreign companies and their Polish contractors determine whether they have a fixed establishment in Poland.

Attachments to invoices: Businesses cannot add attachments to invoices in the KSeF system. This could cause issues for companies that are used to attaching supporting documents to their invoices.

Corrective notes: Corrective notes are excluded from the KSeF system. This could cause issues for foreign companies that need to issue corrective notes.

Language barrier: The KSeF system is in Polish, which could cause issues for foreign companies that do not speak the language.

Navigating and Focusing on the Transition Period

As the 2026 is not far away, it becomes imperative for foreign companies with operations in Poland to prepare diligently. Seeking IT support to ensure compliance with e-invoicing requirements, understanding the nuances of the KSeF system, and staying ahead of clarifications and guidelines issued by the Ministry of Finance will be crucial.

How Can Leinonen Help With Adapting to E-Invoicing in Poland?

Poland’s shift to mandatory electronic invoicing through the KSeF system represents a significant step towards a digitized future. While the transition presents several challenges, proactive adaptation and alignment with the system will enable businesses to thrive within this new invoicing landscape.

As Poland moves towards digital environment, collaboration between local authorities and foreign entities becomes pivotal in navigating these changes seamlessly, ensuring a smooth transition into an era of enhanced efficiency and digitized financial operations.

If you need a reliable accounting partner in Poland, contact Leinonen.

The post Mandatory E-Invoice System in Poland: Understanding the KSeF Changes Effective from 2026 appeared first on Leinonen Poland.

Like most EU countries, there is an extensive list of public holidays in Poland each year. If you are new to operating a business in Poland, it is vital to know your responsibilities.

When are Poland’s Public Holidays?

Polish public holidays that fall on the same date each year:

• 1^st January – Nowy Rok (New Year’s Day)
• 6^th January – Święto Trzech Króli (Epiphany)
• 1st May – Święto Pracy (Labour Day)
• 3rd May – Święto Narodowe Trzeciego Maja (Constitution Day)
• 15th August – Wniebowzięcie Najświętszej Maryi Panny (Assumption Day)
• 1st November – Wszystkich Świętych (All Saints’ Day)
• 11^th November – Narodowe Święto Niepodległości (Independence Day)
• 25^th December – Boże Narodzenie (Christmas Day)
• 26^th December – Drugi Dzień Bożego Narodzenia (St. Stephen’s Day)

Polish public holidays with varying dates each year:

• Wielkanoc (Easter Sunday) – 20^th April in 2025
• Drugi Dzień Wielkanocy (Easter Monday) – 21^st April in 2025
• Zielone Świątki (Pentecost) – 8^th June 2025
• Boże Ciało (Corpus Christi) – 19^th June 2025

What Legal Entitlements do Employees Have During Public Holidays in Poland?

In Poland, employees are entitled to the following if they work on a public holiday:

• Reduced nominal operating time.
• An additional day off (and another if the holiday falls on a Saturday).
• 100% of their hourly rate on top of their regular remuneration for overtime work.

What are the Legal Obligations of Employers During Public Holidays in Poland?

Employers have several responsibilities in relation to public holidays in Poland. These include:

• Providing the day off or arranging an alternative. Public holidays in Poland should be days off for employees, unless work is necessary for a valid reason (e.g. for medical and rescue services). If an employee works on a public holiday, employers must provide a replacement day off established in accordance with the collective labour agreement, or the individual’s employment contract.
• Providing adequate notice. If an employee needs to work on a public holiday, the employer must let them know and agree on a replacement day off in advance.
• Providing additional remuneration. If an employee needs to work on a public holiday, their employer should pay additional remuneration. This must be in accordance with the provisions of the Labour Code or collective labour agreement.
• Being aware of any special regulations relating to their industry. Some industries have specific regulations around working on public holidays and Sundays.

How is Holiday pay Calculated in Poland?

Alongside public holidays, full-time employees in Poland are entitled to 20 or 26 fully paid days off on annual leave each year. The number of days off allowed depends on how long they have worked for:

• Less than 10 years working = 20 days off.
• More than 10 years working = 26 days off.
• Higher education (bachelor’s or master’s degree) is viewed as equivalent to eight years of work. Therefore, employees with a higher education qualification are entitled to 26 yearly days off after just two years working.

When calculating holiday pay, employers in Poland must consider an employee’s current base salary and variable components (e.g. regulatory bonuses, overtime pay and allowances for night work).

Holiday pay in Poland can be worked out using the following process:

1. Add up the amount of base salary and variable components an employee has earned in the last three-month period.
2. Add up the number of hours the employee has worked during the same period.
3. Divide the total pay by the number of working hours to work out an average hourly rate.
4. Multiply their average hourly pay by the number of working hours in the holiday leave period.

Manage Tax, Payroll and Accounting in Poland With Leinonen

Navigating public holidays and other regulations in a new country can be overwhelming for businesses. Having operated in Poland for over 14 years, Leinonen can offer the detailed, industry-specific support you need with everything tax, payroll and accounting related as you set up your business in Poland.

Currently operating in 11 countries, we have had bases in northern and eastern Europe for more than 30 years, and specialise in managing the intricacies of cross-border commerce. Get in touch today to arrange a consultation.

The post Managing Public Holidays in Poland as an Employer appeared first on Leinonen Poland.

What is the Mobility Package?

The Mobility Package is a set of arrangements that were announced by the European Parliament in July 2020. The regulations came into force twenty days after its announcement, i.e., on August 20, 2020. These regulations introduce changes to various aspects of the transportation industry, including drivers’ driving time and rest periods, the method of delegating drivers, fair competition, and tachographs.

Key Components of the Mobility Package

One of the key requirements of the Mobility Package is that data for drivers’ remuneration must be obtained from the tachograph, a device that records working time. The Mobility Package also regulates the settlement of international drivers’ wages under specific conditions.

The driver’s remuneration should include the following components:

• Base salary
• On-call lump sum
• Lump sum overtime
• Lump sum night hours
• Flat-rate work abroad
• Possible compensation of lump sums for overtime, night hours, and on-call duties
• Possible subsidies to foreign wages (if the driver performs cross-trade and cabotage operations)
• Bonuses, prizes

Understanding ZUS (social insurance) Contributions

The maximum value of the insurance remuneration base is the forecasted average remuneration in the national economy for a given calendar year. Settlement of remuneration should begin with determining the total amount of income (Poland and abroad). After determining the amount of income, it needs to be verified whether it is higher, lower, or the same as the forecast average salary. In 2024, it is PLN 7,824.

Income Tax Implications

The part of the income corresponding to 30% of the amount specified in the regulations on business trips for each day of stay abroad is free from income tax. You should therefore calculate the value of the allowance for each day of your stay abroad. Calculate 30% of this value and reduce the employee’s income by this amount, then calculate the tax precisely.

Conclusion

The basis for calculating remuneration for drivers is the Tachograph report showing working time. International drivers are entitled to two reliefs if they meet the appropriate conditions: income tax relief and social security contribution relief.

The post Understanding the Mobility Package: A Comprehensive Guide for Professional Drivers appeared first on Leinonen Poland.

The core principle of the Estonian CIT is that companies do not pay income tax on their retained earnings until they distribute profits to shareholders. This allows businesses to reinvest their profits without an immediate tax burden. The tax is only due when profits are distributed as dividends, or used to cover losses from previous years.

However, the Polish version of the Estonian CIT has some key differences from the original Estonian model:

• Eligibility Requirements: To qualify for the Estonian CIT, companies must meet several conditions, including being owned solely by natural persons, having a minimum share capital, and maintaining specific accounting records.
• Higher Tax Rates: While the standard CIT rate in Poland is 19%, the Estonian CIT rates are higher – 10% for small taxpayers and startups, and 20% for other companies.
• Limited Tax Preferences: Companies under the Estonian CIT cannot benefit from certain tax preferences, such as the IP Box regime or R&D relief.
• Minimum Period: Once opted for, the Estonian CIT must be applied for at least four consecutive tax years.

Advantages and Drawbacks

The main advantage of the Estonian CIT is the ability to defer tax payments on retained earnings, providing more cash flow for investments and growth. It also simplifies tax accounting by basing the tax calculation solely on accounting data.

However, the higher tax rates, limited tax preferences, and strict eligibility criteria may offset some of the potential benefits, especially for larger companies. Additionally, the lack of established practices and interpretations from tax authorities creates uncertainty around the application of the new regime.

The main benefits of the “Estonian CIT” model for small and medium enterprises (SMEs) in Poland are:

• Deferral of Corporate Income Tax (CIT): SMEs under the Estonian CIT do not pay CIT on retained earnings until they distribute profits as dividends. This allows them to reinvest profits back into the business without an immediate tax burden, improving cash flow and liquidity.
• Fostering Investments and Growth: By not taxing retained earnings, the Estonian CIT incentivizes SMEs to invest their profits into business expansion, innovation, and productivity improvements instead of distributing dividends.
• Simplified Tax Compliance: Companies under the Estonian CIT do not need to maintain separate tax records for CIT purposes. The tax is calculated based on accounting data when profits are distributed, reducing administrative costs.
• Employment Generation: The government expects the Estonian CIT to contribute to the creation of around 120,000 new jobs by enabling SMEs to reinvest more profits into growth and development.
• Crisis Resilience: Retaining profits without taxation can provide SMEs with a financial buffer during economic downturns, improving their crisis resilience.

However, it’s important to note that the Polish version of the Estonian CIT has stricter eligibility criteria and higher tax rates compared to the original Estonian model. SMEs must meet specific conditions related to ownership structure, revenue limits, employment levels, and investment commitments to qualify for and remain under the Estonian CIT regime in Poland.

There are several limitations and drawbacks to the “Estonian CIT” model as implemented in Poland compared to the original Estonian version:

• Stricter Eligibility Criteria: To qualify for the Estonian CIT in Poland, companies must meet specific conditions related to ownership structure, minimum share capital, accounting records, and investment commitments. These requirements are more complicated than in Estonia.
• Higher Tax Rates: While Estonia has a flat 20% tax rate on distributed profits, Poland applies higher rates – 10% for small taxpayers/startups and 20% for other companies. This reduces the tax advantage compared to Estonia.
• Limited Tax Preferences: Companies under the Estonian CIT in Poland cannot benefit from certain tax preferences like the IP Box regime or R&D relief. This makes it less attractive for innovative or R&D-focused companies.
• Minimum Application Period: Once opted for the Estonian CIT, companies must apply it for at least four consecutive tax years in Poland. This reduces flexibility compared to Estonia.
• Uncertainty and Lack of Established Practices: As it is a new regime, there is uncertainty around its application and interpretation by tax authorities in Poland. The lack of established practices creates challenges for businesses.
• Restructuring Limitations: Companies that underwent certain restructuring activities like mergers or divisions face additional restrictions on using the Estonian CIT for a period of time.
• Preliminary Tax Adjustments: When transitioning to the Estonian CIT, companies must make preliminary tax adjustments and may face deferred tax liabilities if they exit the regime before 4 years.

While the Estonian CIT aims to stimulate investments for SMEs in Poland, the added complexities, higher rates, and limited applicability compared to the original Estonian model have raised concerns among businesses about its real benefits.

If you have any questions regarding company taxation in Poland, contact Leinonen.

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