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.

To guarantee easier market access and gain trust in Poland, it is recommended to establish a legal entity. The critical step is to choose which type of the entity to form.
The most common legal form among entities with foreign capital is a Limited Liability company (Sp. z o.o.) – there are also some other forms, but they’re rarely used.

Setting up a company in Poland is easiest done with help of local lawyers.

TAXATION

As a standard, companies in Poland pay 19% corporate tax on earnings.

9% reduced CIT rate is applicable to

• small taxpayers earning revenues equivalent to EUR 2M Eur or less including VAT,
• for taxpayers starting a new business for their first tax year in operation,
• in the case of companies that continue their activity – sales revenue including VAT, for the previous tax year did not exceed 2M Eur

VAT rates in Poland: basic: 23%, reduced 8%

Average salary in Poland: 8161 PLN gross
Minimum wage in Poland: 4666 PLN/month gross or 30,50 PLN/hour gross

Personal progressive income tax in Poland: 17% and 32% after exceeding income 85.528 PLN

Social security system in Poland has has three main categories where the payments are made, summing-up to ca. 20,48% for the employer and 13,71% for the employee.

• The Social Insurance Institution ZUS
• Obligatory Pension funds (OFE)
• Voluntary pension funds

Special Economic Zones are widely used, and companies can be granted various tax benefits when investing in certain regions. Make sure to consult local taxation specialists to be on top of all these nuances.

EMPLOYMENT

The regulation of employment in Poland is governed by the Labor Code, which applies equally and must be complied with by both the employer and the employee. Employment contracts cannot be less advantageous to the employee than the Labour Code.

Expats are liable to pay Polish taxes and social charges if they stay in the country at least 183 days during a calendar year. Both wages and prices are higher in Warsaw and other big cities compared to the other parts of the country. The minimum monthly salary in Poland is PLN 2800 in 2021.

There are 3 methods of terminating employment agreement in Poland: termination by mutual consent, termination with notice and termination without notice. There has to be a valid reason for terminating the employment, unless the employee is still on a probation period.

BEING AN EXPAT

Poland is growing in popularity as a destination for Expats. As part of the EU, Polish labor market is open to all EU-citizens. Many foreigners working in Poland are fully under Polish social system, but also other solutions are possible – depending on the country of origin.

If an expat can prove being under social security of another EU-country, payment of certain social costs (ZUS) can be avoided. With the help of local experts, all your payroll management needs will be handled efficiently and correctly.

The post BUSINESS IN POLAND 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.

The post Estonian CIT in Poland: An Overview appeared first on Leinonen Poland.

While the customer pays VAT (the amount is typically added to the price of goods and services), businesses are responsible for correctly filing and paying their VAT return. And with so many goods and services being subject to VAT at varying rates, businesses in Poland must understand their responsibilities to avoid penalties.

What are Poland’s VAT Rates?

The standard VAT rate in Poland is 23%, but three reduced rates are applicable in certain scenarios. These are:

• 8%. This rate is applicable to a wide range of goods and services. These include certain food products, newspapers, animal feed, agricultural supplies and healthcare products. The full list of goods and services to which this rate applies can be found in Annex 3 of the VAT Act.
• 5%. This rate applies to basic foods, hygiene products, products for children, and books. More details on the specifics can be found in Annex 10 of the VAT Act.
• 0%. This rate applies to things like exported goods, intra-European supply of goods, and international transport services.

Full details on the goods and services subject to each VAT rate can be found in Poland’s VAT Act.

What are the Most Common VAT Mistakes in Poland?

1. Improper VAT Registration
   The threshold for registering for VAT in Poland is 200,000 PLN in a 12-month period. Businesses exceeding this threshold must register for VAT, even if they perform VAT-exempt activities. If your business is close to this, make sure to register for VAT promptly and accurately, and keep your registration details up to date.
2. Incorrect Invoicing
   Common invoicing mistakes include missing out or including the wrong Tax Identification Number (NIP) on invoices. Errors like this can lead to complications in VAT reconciliation. Double check all invoices before sending them out to clients. This should help you avoid future problems that could lead to incorrect reporting, and ultimately penalties.
3. Documentation and Record Keeping Errors
   Missing or incomplete records may hinder VAT compliance and lead to penalties. Make sure to keep organised records of all your business’ transactions, including receipts, invoices and any other relevant documents. Keep hold of both sales dates and document receipt dates, as these are both required for reporting VAT in Poland.
4. Incorrect VAT Calculations
   This can result in over or underpayment, and ultimately adjustments and penalties. One of the most common VAT mistakes made by businesses is applying the wrong rate of VAT to their goods or services.
   
   Another common error is incorrect VAT deductions; input VAT can only be recovered on services and goods used for taxable business activities.
   
   As an example VAT calculation on leasing passenger cars:
   Mixed Way (Business and Private)
   If the car is used for both business and private purposes (mixed), the taxpayer has the right to deduct 50% of the VAT amount from the leasing instalment or other fees under the contract.
   The 50% limit also applies to expenses related to vehicle operation and fuel purchases.
   
   Business Only Method:
   If a leased passenger car is used by the entrepreneur exclusively in his business activity, the taxpayer is entitled to full deduction of VAT.
   You can deduct VAT not only from leasing instalments, but also from other expenses, including fuel.
   The exclusive use of the car within the enterprise must be properly documented (e.g. registering the vehicle as a company vehicle at the tax office).
   
   Human errors in calculations (e.g. rounding issues) are also common, as are errors caused by poor documentation and record keeping.
   
   Check that you are applying the right VAT rates to your products or services. If possible, use reliable accounting software that can perform VAT calculations automatically, eliminating the possibility of human error. Alternatively, regularly review your calculations to catch discrepancies early.
5. Incorrect Handling of Reverse Charge Transactions
   Mistakes when handling reverse charge transactions are common; it is an area of VAT that can be particularly tricky. If you are unsure, update yourself on the latest VAT regulations or consult with a trusted tax professional.
6. Failing to Meet Deadlines
   You may be required to deliver VAT filings through the Standard Audit File for Tax (SAF-T) system each month or each quarter. Either way, late filing can result in costly penalties. Allow yourself plenty of time to prepare your returns and set reminders to make sure you do not miss deadlines.
7. Lack of Updated Knowledge of VAT Regulations in Poland
   VAT rules and regulations sometimes change, and this often leads to unintentional errors by businesses. Therefore, not staying up to date on tax laws and VAT regulations can result in penalties. One of the best ways to stay educated is by consulting a tax professional.

What are the Consequences of Late or Incorrect VAT Payments?

Businesses can be issued hefty fines for late or incorrect VAT payments in Poland. For failing to file a VAT return or late payment of VAT in Poland, a fine of up to 5600 PLN (around 1230 euros) can be issued. For each year of undeclared VAT, a late payment interest rate of 4% to 14,50% may also be applied.²

Avoid VAT Mistakes in Poland With Leinonen

It takes vigilance, keen attention to detail, and a thorough understanding of the most up to date VAT rules to avoid these common VAT mistakes in Poland. If your company is new to operating in the country, this can be overwhelming.

Leinonen have been supporting businesses in Poland for 15 years, offering tailor-made tax, payroll and accounting services. With 70 small and large business clients in Poland alone and a strong presence in many EU countries, we can offer a unique combination of Polish and cross-border expertise.

Make an enquiry today to find out how Leinonen Poland can support your business, helping you avoid common VAT mistakes in Poland.

The post 7 Common VAT Mistakes in Poland appeared first on Leinonen Poland.

Here are the key details:

1. Applicability:
   • The minimum tax applies to taxpayers who meet the following criteria:
     • Have their registered office or management in the territory of Poland.
     • Generate income, regardless of where it is earned.
     • Conduct business activity through a foreign permanent establishment located in Poland.
     • Have suffered a business loss in the relevant tax year or whose share of income in revenue did not exceed 2%.
2. Tax Rate:
   • The minimum tax rate is 10% of the tax base.
   • It is payable by the due date of the annual return (for 2024, by the end of March 2025).
3. Exemptions:
   • Certain groups of entities are exempt from the application of the minimum income tax regulations. These include:
     • Start-up businesses (up to 3 tax years from commencement).
     • Small taxpayers (annual turnover of no more than 2 million EUR).
     • Financial enterprises, mining companies, and municipal companies.
     • Taxpayers primarily providing health care services.
     • Entities in bankruptcy, liquidation, or under restructuring proceedings.
     • Shareholders or members of companies meeting specific criteria within a group structure.

To calculate the minimum income tax in Poland, you need to determine the tax base and then multiply it by 10%. The tax base is calculated based on the sum of three components: income from other sources, capital gains, and the value of income achieved by the taxpayer in the tax year.

In the classical method, the minimum tax base is the sum of three components.

1. an amount corresponding to 1.5% of the value of tax revenues from operating activities achieved in a given year (other than from capital schemes)
2. debt financing costs incurred for the benefit of related entities in the amount exceeding 30% of tax EBITDA
3. costs of purchasing certain services and intangible rights in the amount exceeding PLN 3,000,000 + 5% EBITDA

Adding part of the costs (above the limit referred to above) for the acquisition of:

• advisory services, market research, advertising services, management and control, data processing, insurance, guarantees and sureties and similar services;
• all types of fees and charges for the use or the right to use rights or values such as copyrights, licenses, know-how;
• transfer of the risk of debtor’s insolvency arising from loans other than those granted by banks and cooperative savings and credit unions, including liabilities arising from derivative financial instruments and benefits of a similar nature.

Taxpayers can also opt for a simplified method where the taxable amount is 3% of the value of tax revenues other than income from capital gains. This simplified method requires informing the tax office in the tax return. Taxpayers can deduct the minimum tax paid for a specific year from their income tax in subsequent years, up to 3 tax years following the year of payment.

The post Poland Sets Up Minimum Business Tax to Stop Profit Moving appeared first on Leinonen Poland.

Can you briefly introduce yourself and tell us about your journey with Leinonen? 

I have been working in Poland and the CEE region for many years in different finance-related positions and always in Finnish-rooted organizations. Leinonen combines nicely both financial services and Finnish roots as the slogan “a very Finnish accounting office” states,  so it was a natural step. In previous positions, I have been on both sides of the table, meaning providing and buying financial services, so I felt I could also provide some insights and ideas to Leinonen services and portfolio.  I started in Leinonen 1.4.2020 and not enough that it was April Fools’ Day, but it was also the very first day of the total lockdown due to COVID-19. The whole country was closed, and we were forced to work remotely, so in fact I met my new team for the first time face-to-face after three months. 

As someone originally from Finland, how has your Finnish background influenced your approach to managing the Poland office? 

My team could better answer this, but I think the Finnish way is low hierarchy and open doors. I try to be easily approachable and listen to ideas and opinions. I emphasize straightforwardness, transparency, and a can-do attitude, which leads to quick decision-making and agile business. It is also valued by our clients that I can relate to those entering the Polish market; I understand their background, expectations, and assumptions.

I try to be easily approachable and listen to ideas and opinions. I emphasize straightforwardness, transparency, and a can-do attitude, which leads to quick decision-making and agile business.

What are the primary goals and objectives you have set for Leinonen Poland for this year? 

We have of course our hard targets linked directly to our everyday work. Our vision is to be part of the infinity game, meaning that we’re here to stay. This makes continuous improvement very important and our goal currently is to build a solid foundation for future development and utilize the technical possibilities enabled by the legislation (such as planned obligatory e-invoices in Poland).   

How do you build teamwork and get your team to work well together? 

We have regular team meetings where we discuss and share different topics. It’s very important that everyone can have a say and contribute; more junior team members have a chance to learn from more senior specialists etc. We have also put extra effort into increasing the awareness of the importance of communication, both internal and external, in the form of training and exercises. We have some celebrations as well, last summer we organized a Summer Days meeting in Poland for whole the Leinonen Group, and locally we meet for Christmas, etc. When teams get to know each other better, it’s also easier to work together.   

How has the shift to remote work impacted Leinonen Poland’s operations, and what strategies have you employed to ensure productivity and cohesion among team members? 

I think this is not an issue anymore. The hybrid work model is a standard nowadays; we do have our office days and remote workdays. The situation now is different than at the beginning of the pandemic time. Now we’re in the driver’s seat and decide how to organize the work in the best way, and we’re not forced to do full-time remote work. Everyone is familiar with the equipment and online tools and the teams are utilizing them impressively well for communicating with each other’s, clients or generally organizing the work, so I haven’t observed any major changes in the efficiency. In our business, the work is anyway very task-oriented, and cyclical (monthly, quarterly, and annual) and we need to deliver on time regardless of the circumstances.   

How do you ensure continuous professional development for your team members and yourself? 

We organize internal and external trainings regarding the legal or tax changes etc., and support with the courses or other ways to increase and improve professional qualifications. We also follow Leinonen Group projects e.g. there is a new program for Team Leaders, which focuses more on management skills.

How do you recharge and maintain a work-life balance, especially given the demands of leading a team? 

I have a dear adulthood hobby, discgolf (also known as frisbee golf) which is the best way to switch off completely from work. Discgolf means hours of outdoor exercise, techniques of throwing discs, and strategy on how to play in different courses in varying terrain or changing weather conditions. You may play with or against others (in a tournament), but mostly it’s about challenging yourself and playing against your own weaknesses.    

What advice would you give to someone aspiring to take on a leadership role in a multinational organization? 

It’s hard to give advice, but at least I have always tried to be open-minded but very clear about my expectations and communication. Having the right people in the right place is very important and I believe very much in teamwork and encourage it.

We extend our heartfelt thanks to Maria for sharing her journey and insights with us. To our readers, thank you for joining us on this enlightening journey. We look forward to bringing you more inspiring stories from our team at Leinonen.

The post Maria’s Leadership Journey at Leinonen 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.

In conclusion

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 Poland’s Mandatory Electronic Invoicing System: Understanding the KSeF Changes Effective from 2026 appeared first on Leinonen Poland.

Leinonen Poland is actively involved in assisting companies in the green energy sector, with projects ranging from 53 MW to 202 MW.

Accounting Challenges in Green Energy

The unique nature of renewable energy projects presents specific accounting challenges. Leinonen Poland grapples with questions such as obtaining external financing, tax-efficient project implementation, and the intricacies of settlement structures.

Accounting rules in the green energy industry have their own specific aspects due to the nature of the business in the field of renewable energy sources (RES). This poses many questions and challenges for accountants:

• What is the process of obtaining external financing?
• How to implement RES projects in an effective and tax-friendly way?
• What to look for when determining the settlement structure of RES projects?
• How to properly include accounting transactions related to certificates of origin for electricity and CO2 emission rights?
• How to correctly settle property tax?

Laws and Regulations Governing Green Energy

Energy companies, classified as “strategic” due to their pivotal role in the supply chain, are subject to rigorous legal and regulatory frameworks. Key legislations include the Energy Law of April 10, 1997, and the Accounting Standards Committee’s positions on greenhouse gas emission allowances.

Companies in the initial stages of green energy investments in Poland are actively engaged in negotiations with operators for grid connections. These negotiations are essential in setting the terms for project commencement, reflecting the importance of proper accounting in project planning and execution.

Essential Certificates and Documentation

An important document is the Application for defining the conditions for connecting a photovoltaic power plant to the power grid. It must be prepared and submitted to the electricity grid operator in your region. The following documentation must be attached to the application:

• Technical data of the photovoltaic power plant, such as installed capacity, type of solar panels, inverters, location, etc.
• Geospatial data on the location of the power plant, including geographical coordinates.
• Power plant plan and electrical diagrams.
• Technical documentation and certificates for solar panels and inverters.
• Information on the type of connection and power installation that must be adapted or built to connect the power plant to the grid.

The procedure for determining the connection conditions is regulated in the Energy Law, the System Regulation, as well as in the relevant Instructions for the Operation and Operation of the Transmission Network.

The condition for the application to be considered is to make an advance payment in the appropriate amount. The waiting time for consideration of the submitted application depends on qualifying it to the appropriate connection group. For applications from group II (high voltage) it is up to 150 days.

After receiving the connection conditions, the applicant has two years to negotiate the conditions and sign the connection agreement. The network connection agreement signed by both parties is the basis for commencing design, construction and assembly works related to the implementation of the investment.

Accountant’s Perspective

Activities related to energy production are closely related to the impact on the natural environment, hence numerous regulations introduced around the world at the levels of international and national organizations to limit this impact. The Polish legislator, following the EU legislator, introduced regulations aimed at promoting energy produced from renewable sources and for undertaking energy efficiency projects.

To guarantee the economic profitability of producing energy from renewable sources and implementing energy efficiency projects, it was necessary to introduce a system of financial incentives. The characteristics of the green energy industry have forced the creation of specific legal regulations, as well as instruments regulating their activities in terms of environmental impact. These instruments: energy certificates of origin and CO2 emission allowances became traded on the commodity exchange. The extremely complex mechanism of operation of these instruments poses huge challenges to accounting in terms of recognizing, disbursing, and carrying out valuation of these components in the financial statements.

Due to the growing importance of RES, tax regulations and legal regulations are constantly modified to consider the specificity of this industry. Enterprises must stay up to date with regulations and adjust their accounting to new requirements.

The green energy industry is dynamic and subject to rapid changes, especially in the context of the development of new technologies and changing regulations. Therefore, enterprises in this industry must be flexible and adapt their accounting to changing conditions. Using the services of experienced accountants and tax advisors can be a key to maintaining proper accounting in the green energy industry.

Salary Insights

With an expected fivefold increase in employment in the renewable energy sector by 2050, various roles are in high demand. Electrical installers can earn over PLN 8,000, customer advisors over PLN 4,000, and renewable energy traders can see earnings around PLN 20,000 per month. (According to data on the website https://zielonagospodarka.pl /)

Renewable energy investments in Poland

The unstable gas market, limited energy supply combined with rising prices make energy security a priority. As a result, governments plan to accelerate and increase investments in renewable energy sources.

After the outbreak of the war in Ukraine, there were huge and rapid changes in the global energy market, which resulted in a retreat from Russian fuels, primarily natural gas and oil.

The energy crisis caused by the war in Ukraine forces everyone to look for new sources of energy. The current global economic situation, inflationary pressure and emerging signs of recession may facilitate increased spending on infrastructure projects. And this should create more opportunities for the renewable energy industry by increasing the demand for green energy.

In 2023, Poland advanced once again in the EY RECAI (Renewable Energy Country Attractiveness Index) ranking of the attractiveness of countries for those who invest in renewable energy sources: by one place to 17th position. At the same time, it has become the tenth (last year it was 15) the most attractive country in the world in the PPA ranking of contracts for long-term purchase/sale of energy from RES. This year’s ranking also evaluates the impact of the US Inflation Reduction Act on investments in renewable energy sources around the world.

As part of the RECAI ranking, countries are also assessed from the point of view of the attractiveness of the PPA (Power Purchase Agreement) market, i.e. contracts for the long-term purchase/sale of renewable electricity. From the perspective of the energy consumer, the main goal of the PPA is, on the one hand, to guarantee a fixed price and, on the other hand, to reduce emission rates. From the perspective of an energy producer, PPAs allow for a stable source of revenue in the long term.

This is the greatest advancement for Poland, which has become one of the leaders of the PPA market in Europe. It was overtaken by countries such as Spain, Germany, and Great Britain, which started their PPA path much earlier.

Many companies, including international ones, conduct significant production, trade and service activities in Poland. Considering the high average emission intensity of electricity generation in our country, enterprises are motivated to conclude PPAs for renewable energy sources.

At the end of 2022, the Polish government introduced a cap on energy producers, including on renewable energy prices, to protect consumers against excessive increases in energy prices, which led to high uncertainty regarding PPAs and many contract negotiation processes were suspended, delayed, or postponed.

However, the growing interest in PPA contracts, also in the context of the decline in prices in PPA contracts compared to last year and the prospects of abolishing these limits, should contribute to a further increase in concluded transactions. At the same time, the changes introduced in Rule 10H should stimulate an increase in the number of wind projects in the medium term, taking into account the necessary period of preparation and obtaining permits for this type of assets.

EY has been assessing the investment attractiveness of countries in terms of investments in renewable energy sources since 2003. The RECAI index covers the 40 largest markets in the world. Based on the RECAI database, EY is also publishing a second ranking from the end of 2021 – the attractiveness of the market for long-term contracts for the purchase and sale of renewable electricity under PPA contracts. In 2022, the so-called “normalized” RECAI index, which takes into account the GDP of individual countries.

In conclusion, Poland’s progress in the EY RECAI ranking and its standing as a leader in the Power Purchase Agreement market demonstrate its growing attractiveness for renewable energy investments. While challenges like the energy price cap and evolving legal frameworks persist, the green energy industry in Poland continues to thrive, presenting significant opportunities for both investors and professionals in the sector. When it comes to accounting and taxes connected with green energy, feel free to ask any further questions from Leinonen Poland (https://leinonen.eu/pol/).

The post Navigating the Green Energy Landscape in Poland – Accounting, Laws, and Regulations appeared first on Leinonen Poland.

The payroll list includes the employee’s base salary and other components as well as all benefits. Presents tax settlements, costs of obtaining a tax relief as well as ZUS and PPK contributions. It is a document on the basis of which remuneration is transferred to the employee’s account. Payroll lists are stored for the period of required access to this information, resulting from pension, disability and tax regulations, but not shorter than 5 to 10 years.

The total cost of employment includes several components. First and foremost is the gross salary, which is the amount paid to the employee before any deductions. Additionally, employers are required to contribute to various social security funds on behalf of their employees. These include pension insurance, disability insurance, accident insurance, the Labour Fund, the Employee Guaranteed Benefits Fund, and the PPK Fund (a newly introduced employee savings program). The contributions to these funds are calculated as a percentage of the employee’s gross salary, resulting in a combined total percentage of 21.98%. This means that for a gross salary of 5,000 PLN, the total cost of employment amounts to 6,031.32 PLN.

See the example below for the cost of employment:

An employer who employs at least 25 full-time employees must make monthly payments to the State Fund for Rehabilitation of Disabled People if it does not reach the 6% employment rate for disabled people. Values ​​are calculated taking into account the average wage, employment status coefficient 0.4065 employment of people with disabilities, and coefficient 0.06.

After exceeding the annual amount of gross remuneration of 208,050, i.e. the upper earnings threshold, the Employer and the Employee do not pay ZUS contributions: pension insurance and disability. For Employer, it means that the total cost of salaries is decreasing.

MINIMUM SALARY AND OVERTIME WORK

The current minimum salary in Poland is 3,490 PLN gross. This is the minimum amount that employers are legally required to pay their employees. The minimum wage is periodically adjusted to account for inflation and changes in the economy. From July 1, 2023, the minimum wage will be increased to 3,600 PLN gross, with an hourly rate of 23.50 PLN.

In terms of overtime regulation, the standard working time in Poland is 8 hours per day and 40 hours per week. Employees are entitled to a 15-minute break if they work at least 6 hours a day, which is included in their normal working hours. Employees who spend at least 4 hours a day working at a computer monitor are entitled to a 5-minute break every hour. Overtime work is allowed in special cases and must be approved by the supervisor. Employees are entitled to additional compensation for overtime work, which 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 in the same amount of hours worked.

For overtime work, in addition to the normal remuneration, an allowance in the amount of:

1) 100% of remuneration – for overtime work falling:

• at night,
• on Sundays and public holidays that are not working days according to the working time schedule in force for the employee,
• on a day off given to the employee in lieu of work on Sunday or on a holiday, according to the working time schedule in force for the employee;

2) 50 % of remuneration – for overtime work falling on any day other than that specified in item 1) above.

When it comes to work on public holidays, it can only be performed in specific situations specified in the regulations (by Art. 151 of the Labor Code). Examples include:

• if it is necessary to conduct a rescue operation in order to protect human life or health, protect property or the environment, or to remove a failure,
• in continuous operation, in shift work, 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 necessary due to their social utility and everyday needs of the population (e.g. in gastronomy or factories

If the employee will perform his duties on Sunday and it is a day off from work, the employer is obliged to provide him with another day off. However, if the employee is unable to take the “time off” within this period, the employer must pay the employee the appropriate remuneration and allowance.

Employee must receive special salary for work on a day off, as well as an allowance of 100 percent for each hour worked to pay. This rule applies both on Sundays and public holidays.

EMPLOYEE BENEFITS AND TAX DEDUCTIONS

Employee benefits play an important role in Poland’s payroll tax system. Some benefits, such as lunch coupons and eye glasses refunds, are not subject to social security contributions or income tax.

Excluded from the calculation basis for ZUS contributions are holiday benefits paid on the Company Social Benefits Fund up to PLN 1,914.34.

On the other hand, benefits like holiday pay, private medical insurance, life assurance/insurance, and sports activities are subject to both social security contributions and taxation.

Only If the employee participates in the costs of some benefits, in accordance with the regulations, the  benefits is taxable but without ZUS contribution.

Employers can also provide employees with additional extras, such as gym memberships or other various perks. It’s important to note that these extras are taxed, but some may be exempt from social security contributions. For example, prizes in the form of jubilee bonuses, inventiveness or research work bonuses, sports-related bonuses, and gifts for important life events (up to a certain limit) are exempt from social security contributions. Additionally, employers with fewer than 50 full-time employees may establish a Social Fund, which provides benefits and rewards to employees that are exempt from both social security contributions and taxation until December 31, 2023.

In Poland, there are also additional tax deductions available for certain circumstances. These include deductions for single parents with children, large families with four or more children, individuals who have recently relocated to Poland, young people up to 26 years old, working seniors, and couples filing taxes together. These deductions can lower the overall tax rate up to a certain income level.

In conclusion, payroll taxes in Poland encompass various contributions and deductions that contribute to the overall cost of employment. Employers are responsible for making contributions to social security funds on behalf of their employees, while employees may benefit from tax deductions and certain exemptions for specific circumstances. It’s essential for both employers and employees to understand the payroll tax system in order to comply with regulations and make informed financial decisions.

If you need a reliable payroll management partner in Poland, contact Leinonen!

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