Progressive personal income tax (PIT) rates calculated based on tax scale:

Tax base:

more than PLN 120,000

up to PLN 120,000

Tax amounts to:

12% minus tax reducing amount of PLN 3,600

PLN 10,800 + 32% of excess amount over PLN 120,000

General tax-free amount: PLN 30,000

Subject to tax exemption are revenues of persons until 26 derived from employment, contract of mandate etc. up to the amount of PLN 85,528.

19 % - optional flat-rate for income from business activity, applied upon notification

19% - for income from capital

19% - for income from private sales of real estate

Private rent - possible only lump sum taxation of revenues (no deduction of related costs, depreciation etc.): 8.5% - for revenues from rent up to PLN 100,000; 12,5% - from surplus exceeding PLN 100,000

Separate sources of income:

1. Employment

2. Activity performed in person

3. Business activity

4. Special branches of agriculture

5. Rents

6. Capital and royalties

7. Non-business sales of real estate or other goods

8. Business carried out through the Controlled Foreign Entity (CFE)

9. Unrealized gains

10. Other sources

Individuals and partnerships carrying out buisness activity are obliged to maintain so called 'tax revenues and expenses ledger' (pol. "Podatkowa księga przychodów i rozchodów") according with the relevant Regulation of Minister of Finance.

Obligation to maintain full accounting books instead, in accordance with Polish Accounting Act - if revenues of business for the preceding tax year amounted to at least equivalent in Polish currency EUR 2.5 million net.

As of January 1, 2025, it is possible to choose to recognize income from self-employment (including start-ups), including those taxed according to the tax scale, 19% flat tax and lump-sum tax on a cash basis (rather than on an accrual basis). Conditions: revenues from business activities in the preceding year did not exceed PLN 1 million and the taxpayer does not keep books of account. A written statement on the choice of this method is required. Applied only in B2B transactions. Not aplied in case of transactions with related parties, entities from tax havens, and to revenues from the disposal of a tangible and intangible asset included in the records of tangible and intangible assets.

Only possible within separate sources of income (income categories), including also capital losses and write-downs resulting from distributions which can be, generally, set-off against capital gains.

Exceptions for certain types of investment income, for real estate losses.

Basically, losses incurred within each of separate sources of income may be set-off with profits obtained from that source of income (exclusively) within the following 5 years, no more than 50% of loss annually.

Possibility to make a deduction by the amount of up to PLN 5 million in one of the above mentioned 5 years without regard to limitation to 50% of loss annually in this year.

Basically tax deductible costs are the ones incurred to generate taxable revenues from given source of income (e.g. business), or to maintain or secure that source of income.

There is a catalogue in the Polish PIT Act of various kinds of expenses whose tax deductability is excluded or limited.

Optional 'lump sum taxation on registered revenues', generally with no deduction of related costs, for income derived from business, where revenues from business for previous tax year did not exceed EUR 2 million or in case of taxpayers starting up their business in a given tax year regardless of the amount of revenues.

Required notification to the tax office on choosing this option.

100% of social insurance contributions and 50% of medical care contributions are deducted from taxable revenues.

Possibility to set off tax losses in case of taxpayer passing from standard PIT taxation of business to lump sum taxation.

Obligation of business to maintain 'revenue records', according with the relevant Regulation of Minister of Finance.

Various lump sum tax rates apply, depending on type of business; tax rates vary from 17% to 2%. For example:

17% - for free professional's services (like translator, legal counsel, tax advisor, accountant, investment advisor etc.)

15% - for advertising, employment, management, facility management, head office, data processing, financial services etc.

10% - for real estate buying and selling services

8.5% - for rent of property or means of transport, accomodation services, R&D services

5.5% - for construction works, transport of goods.

Possible lump sum taxation of revenues from sales of plant and animal products, under certain circumstances. Specific trades and professions may apply lump sum taxation in form of so called 'tax card'.

Basically depreciation over at least 5 years (in the case of used vehicles may be shortened to 2.5 years).

Depreciation of passenger cars, paid leasing fees and their insurance - tax deductible are the amounts allocated to car value not higher than PLN 150,000 (for electric cars the threshold is basically PLN 225,000, except for insurance).

Passenger car operating expenses (including non-deductible VAT, if this is the case) where the car is not exclusively used for business purposes - tax deductibility limited to 75% of incurred expenses.

Deduction of expenses incurred on behalf of employees due to use of private cars for taxpayer's business purposes up to official rate per kilometre (PLN 1.15 / 0.89).

Certain vehicles may be excluded from tax restrictions provided for passenger cars (e.g. van, multi-purpose vehicle, pick-up) under certain conditions.

100% social insurance contributions are deductible.

Medical insurance contributions are:

(a) non-deductible - in case of progressive taxation based on tax scale,

(b) deductible from revenues up to the amount of PLN 11,600 annually - in case of applying 19% flat-rate taxation of income from business activity,

(c) deductible from revenues in 50% - in case of lump sum taxation of revenues derived from business activity.

Medical insurance rates and rules for their assesment basis vary depending on mode of PIT taxation chosen by the taxpayer in a given year.

Generally 20% for interest, royalties, certain types of activities performed in person and certain intangible services; in the case of capital gains - 19%.

Polish-based payer is obliged to withhold and pay the tax (also on behalf of the local beneficiary of investement income, where this is the case).

A DTA can provide for a lower rate of taxation or non-taxation.

'Due care' is required in order to use the relief; the tax residence certificate of the foreign taxpayer has to be obtained.

Relief is granted by reduction at source or with use of pay & refund mechanism.

Pay & refund mechanism applies basically to surplus of payments made to related party exceeding PLN 2 million in a given tax year, unless the payer submits the relevant statement to the tax office on lack of obstacles to apply the relief or the authority issued the relevant opinion on use of preferences.

Refund claim needs to be accompanied by detailed documentation to substantiate entitlement to use preference. Refund claim is submitted by the payment beneficiary (e.g. foreign taxpayer) or by the paying party under certain circumstances.

Payments for intangible services are not covered by the WHT pay and refund system.