| 21 June, 2024

Polish Minimum Tax – First Filing in 2025

After a two-year suspension, the provisions concerning the minimum tax came into effect on January 1, 2024. The minimum tax applies to Polish CIT taxpayers (including branches of foreign enterprises) who report a tax loss or insufficient tax profitability.

Who is subject to the minimum tax?

In general, entities that, in a given tax year, either:

incurred a tax loss from operational activities, or
achieved a tax profitability from operational activities (calculated as the ratio of taxable income to taxable revenues) of no more than 2%

will be required to pay the minimum tax at a rate of 10% of the tax base.

The minimum tax is separate from the "regular" CIT. This means that a company with an income below the aforementioned 2% threshold may be required to pay both the minimum tax and CIT, although the regulations provide for the possibility of reducing the minimum tax by the amount of CIT paid.

Minimum Tax Base

The minimum tax base is determined as the sum of the following three values:

1.5% of the revenue from operational activities;
The excess of the so-called debt financing costs incurred to related entities;
Expenditures to related entities or entities located in so-called tax havens, including:
- costs of intangible services (e.g., advisory services, market research, advertising, management, and control),
- fees and charges for the use of or the right to use copyright, licenses, or know-how,
- specified costs related to the transfer of debtor insolvency risk.

Taxpayers may also choose a simplified form of paying the minimum tax, in which case the tax base is determined as 3% of the revenue from operational activities for the tax year. While the simplified method might be easier to calculate, it could result in a higher tax burden, especially if there are no expenditures as mentioned in points 2 and 3.

The minimum tax is calculated from the tax base thus determined at a rate of 10%.

Exemptions from the Minimum Tax

Not every entity that incurs a loss or does not meet the required tax profitability will be obligated to pay the minimum tax. The regulations provide for certain minimum tax payment obligation exemptions, particularly for:

taxpayers starting their business (during the first three tax years),
taxpayers whose revenue is at least 30% lower compared to the previous tax year,
taxpayers who achieved an income-to-revenue ratio of at least 2% in one of the three tax years immediately preceding the tax year for which the minimum tax is due.

When is the tax due?

Taxpayers whose tax year coincides with the calendar year will be required, for the first time, to potentially pay the minimum tax for 2024 by the deadline for submitting the annual tax return, i.e., by the end of March 2025.

Global Minimum Top-Up Tax

We would also like to draw your attention to the ongoing work on the mandatory introduction of the global top-up tax, known as Pillar 2 minimum tax, in Poland. This tax aims to ensure a minimum level of taxation for both domestic and international large corporate groups (with consolidated revenues exceeding EUR 750,000,000) at an effective rate of 15%. The Polish draft law on the global minimum top-up tax is currently in the early stages of legislative work, but it is expected to come into force on January 1, 2025. We will keep you updated on the progress of this project and the details of the proposed solutions in subsequent newsletters.

Should you have any questions regarding the national minimum tax or the global minimum top-up tax, please do not hesitate to contact the TIAS Tax Department at: office@tias.pl.

Polish Minimum Tax – First Filing in 2025

Zobacz również

Tax relief measures

Restrictions related to application of the WHT preferences

Introduction of the Global Minimum Tax in Poland (Pillar 2)