Estonian CIT in Poland 2021

Tax changes in Poland from 1st January 2021 include a solution commonly called “Estonian CIT”, meaning flat rate on income in capital companies. According to the Ministry of Finance the new tax method is expected to promote investments in Poland and minimize formalities in tax settlement. The new solution in a nutshell as presented by the authorities:

What “Estonian CIT” means in Poland?

  • no tax as long as the profit remains in the company,
  • no separate tax accounting and minimum administrative obligations,
  • taxation lower than at present,
  • simplicity thanks to the principles of the Accounting Act.

How it works?

The tax will be deferred until the profit from the company is paid out (distributed).

Who is the Estonian CIT for?

This solution is aimed at micro, small and medium-sized capital companies (with limited liability and joint-stock companies),

  • whose revenues do not exceed PLN 100 million. The revenue criteria is met by approximately 98% of entities,
  • which shareholders are only natural persons. This means that it can be used by majority of Polish CIT taxpayers (approx. 200,000 companies) in which the investor is close to the company, and the company’s structure is transparent and simple,
  • that do not have shares in other entities,
  • which employ at least 3 people, excluding shareholders (facilitation for small and start-up taxpayers),
  • whose passive activities do not exceed the active revenues from operating activities,
  • which make investments (facilitation for small taxpayers, start-ups as well as those who apply the new system in 2021).

 

All the criteria must be met.

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