Limited Liability Company - Income tax in Poland 1

Limited Liability Company – Income tax in Poland

Limited Liability Company is still the most popular type of company in Poland. This is because you can establish this kind of company very quickly and shareholders are not liable for company commitment. But what about taxation?

Unfortunately, choosing an LLC is not the best options regarding taxation due to changes which were implemented by the Polish government in 2016. Although it is relatively expensive in Poland, this option is competitive compared to Western Europe (especially as Polish labour costs are still low). Taxation of LLCs is regulated by the Act of February 15, 1992, on corporate income tax. According to art. 19.1.1 the amount of tax is 19% of income. Then if shareholders would like to pay out dividends, they would have to pay another 19%. Therefore shareholders must spend a significant part of a company income to earn some money from their firm’s dividends.

The new regulation is in article 19.1.2. According to these rules for new companies and small taxpayers amount of income tax is 15% of their profit?. This rule applies to new companies during their first year of activity. Whereas according to art. 4a.10 small taxpayer is a company that has sales revenue (including VAT) in previous tax year not higher than 1.200.000 Euro. That’s why this solution is not for many companies.  

In conclusion, new regulations have not changed much. Conducting an LLC company is convenient and competitive, and you can find great opportunities in Poland.   

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Krzysztof Wites

radca prawny Krzysztof Wites