9% Corporate Income Tax – company in Poland.
The basic rate of corporation tax for Limited Liability Company in Poland is the flat rate of 19%.
However, from the beginning of 2019 the preferential rate of CIT has been implemented in the rate of 9%.
When 9% Corporate Income Tax for Polish Limited Liability Company will be applicable?
- First of all, the reduced tax rate may be applied only to LLC in Poland, which net revenue in the tax year did not exceed the PLN equivalent of EUR 1.200.000 (without counting VAT) – small enterprises.
In other words, profit (revenue reduced by expenses) does not matter for qualification to 9% CIT rate. Therefore, benefit of prefential CIT rate will be taken mostly by companies rendering non material services connected with lower expenses of commercial activity:
Company which achieved the revenue in the ammount of EUR 1.000.000 and generated expenses at the level of EUR 100.000 (income: EUR 900.000) is entitled to apply 9% corporate tax rate.
On the other hand, Company which achieved the revenue in the ammount of EUR 4.000.000 and generated expenses at the level of EUR 3.100.000 (the same income: EUR 900.000) can not use preferential 9% CIT rate.
- Secondly, 9% CIT can not be applied to revenues (incomes) from capital gains.
In general, upon Polish CIT Act the scope of capital gains is defined quite widely. Capital gains has to be recognized as the revenues from participation in profits of legal persons, but also among others revenues from non-cash contributions, share trading, shares, revenues from specific categories of non-material assets (including trademarks).
It has to be noted that revenues from exchange of virtual currency for a money, goods, service are revenues from capital gains upon Polish corporate tax.
- Moreover, preferential 9% rate of Polish corporate tax shall not apply to companies incorporate by specified in Polish CIT Act reorganizations (transformation, merger or division).The purpose of this regulation is to prevent taxpayers from reorganizing leading to the application of a reduced 9% rate.
The inapplicability to use a preferential 9% corporate tax rate applies to the tax year in which the taxpayer was created (by organizational transformations), as well as the tax year following that year.
Further more 9% CIT in Poland rate can not be applied to capital tax group.