Poland: Income tax payments deferred until time when profits are distributed

The relief is commonly referred to as the “Estonian corporate income tax” scheme.

Until time when profits are distributed

Measures that are part of the “Polish Deal” provide certain beneficial tax treatment for taxpayers with regard to the taxation of corporate income. The relief is commonly referred to as the “Estonian corporate income tax” scheme.

In principle, the Estonian corporate income tax scheme allows for the deferral of payment of the income tax until the moment when the entity’s profits are distributed among the holders of interests in the business. Thus, income tax is not paid on an ongoing basis, allowing funds allocated for this purpose to be reinvested. Importantly, the effective tax rate under the scheme is much lower than the standard tax rate.

Under the Polish Deal, the list of entities eligible to apply the Estonian corporate income tax scheme was extended to simple joint-stock companies, limited partnerships, and limited joint-stock partnerships (previously, the relief was only available for joint-stock companies and limited liability companies).

In general, the changes are effective 1 January 2022.

Read a December 2021 report prepared by the KPMG member firm in Poland

 

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