For corporate income tax (CIT) taxpayers, in addition to the standard 19% tax rate, there is the possibility of applying a preferential rate. The reduced CIT rate of 9%, with the application of a revenue limit, can be applied by entities starting their business in a given tax year and those with the status of “small taxpayer”.
Taxpayer starting business
For a taxpayer starting a business, the condition for applying the 9% rate is the “current revenue limit” of EUR 2 million. According to the regulations, in order to benefit from the preferential tax rate, the taxpayer’s revenues earned in the tax year must not exceed an amount in zlotys equivalent to the equivalent of EUR 2 million, converted according to the average euro exchange rate announced by the National Bank of Poland on the first working day of the tax year, rounded up to PLN 1,000. For taxpayers for whom the tax year is the calendar year, this amount in 2024 is PLN 8,687,000, which is 7% lower than the amount of PLN 9,357,000 applicable in 2023.
The taxpayer’s income in question here is income determined in accordance with the provisions of the Tax Law in a net amount (excluding VAT), regardless of the source from which it comes. It includes all categories of income (revenue), including those exempt from CIT (e.g. grants), income from capital gains, as well as those on which the Ministry of Finance has waived tax collection
Taxpayer continuing operations
If a taxpayer continues operations in 2024, he can apply the reduced CIT rate if he meets a total of two conditions:
- has not exceeded the current revenue limit (mentioned above),
- has the status of a “small taxpayer”.
According to the provisions of the Act, a “small taxpayer” is an entity for which the value of sales revenue (including the amount of due VAT) in the previous tax year did not exceed the equivalent of EUR 2 million, converted at the average exchange rate of the euro announced by the National Bank of Poland on the first working day of October of the previous tax year, rounded up to PLN 1,000. For taxpayers for whom the tax year is the calendar year, the amount of revenue in 2023 giving the status of “small taxpayer” in 2024 is PLN 9,218,000, which is 5% lower than the amount of PLN 9,654,000, i.e. revenue for 2022 applicable in 2023.
When calculating the above limit, all sales revenues of a given taxpayer (including the amount of VAT due), including those exempt from income tax and sales revenues included in capital gains, excluding revenues earned from other than sales, must be included. The limit does not include, for example, dividends received and other income from participation in corporate profits, interest on funds in a bank account, grants, compensation or income from interest redemption. Income from the redemption of subsidies/preferential financing from the PFR is also not taken into account.
Revenue limits in 2023 and 2024
The limits of the relevant revenues conditioning the application of the reduced 9% rate in 2023 and 2024 are as follows:
|
Condition |
Tax year 2023 |
Tax year 2024 |
|---|---|---|
|
Current revenue – taxable revenue EUR 2 000 000 |
PLN 9 357 000 Taxable revenue for 2023 |
PLN 8 687 000 Taxable revenue for 2024 |
|
Small taxpayer – sales revenue EUR 2 000 000 |
PLN 9 654 000 Sales (incl VAT) for 2022 |
PLN 9 218 000 Sales (incl VAT) for za 2023 |
Note that the reduced rate of 9% cannot be applied to income (revenue) from the source of capital gains.
The law also contains an exclusion of the application of the preferential rate for entities transformed and created as a result of restructuring.
Taxpayers that are a tax capital group or a family foundation are also not entitled to the reduced CIT rate.
Reduced rate at advance payments and annual settlement
A taxpayer can apply the reduced rate of 9% at the stage of calculating current advances for income tax. However, he must check the current revenue limit. Exceeding it results in the obligation to calculate advance payments at the basic rate of 19%.
If the taxpayer meets the conditions for the application of the reduced CIT rate, and the current advances for income tax were calculated using the basic rate, then in the annual return the taxpayer can still apply taxation at the preferential rate of 9%.
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