Flat-tax rate CIT (Estonian CIT)
Estonian CIT is an alternative taxation system to “classic” CIT, which has been in the Polish legal system since January 1, 2021. It has separate accounting rules, tax rates or exemptions.
The idea behind Estonian CIT is that profits earned by the taxpayer and retained (reinvested) in the company are not subject to income tax. The legislature also aimed to tax distributions equivalent to profit distribution, resulting in the introduction of taxation of so-called hidden profits. Taxation should only occur when profits are distributed from the company. Therefore, if most of the profits earned by the taxpayer are to be reinvested or retained in the business, this form of taxation can be an extremely effective alternative.
Despite the fact that it is a form of taxation reserved for CIT-taxed entities, it is an attractive alternative for entrepreneurs conducting business in the form of sole proprietorships, general partnerships, civil partnerships, as well as limited partnerships and limited joint-stock partnerships.
In addition, after the changes introduced under the so-called Polish Deal, the possibility of choosing Estonian CIT is not dependent on incurring capital expenditures or the scale of income or revenue generated, which was the reason for the reluctance to this form of taxation in its original version.
Who is it for?
- Estonian CIT taxation may apply to: joint-stock companies, limited liability companies, limited partnerships, limited joint-stock partnerships, simple joint-stock companies.
- Your business is growing and you are planning to further reinvest funds for development?
- Are you planning to grow your business and would like to start accumulating tax-free funds now?
- Would you like to improve the liquidity of your business or accumulate savings for more difficult times?
Our support scope:
- Analysis of the possibility of benefiting from Estonian CIT and calculation of potential savings.
- Support in business reorganization to take advantage of Estonian CIT.
- Ongoing support in the application of Estonian CIT.
- Identification of risks related to "hidden profits", among others.
- Confirmation of interpretative doubts through tax ruling.
Contact one of our experts on safe tax optimization
Winning the case before the Supreme Administrative Court
on tax control for 2013 and determination of tax liability. Ref. act II FSK 585/20
Winning the case before the Supreme Administrative Court
regarding the Company's CIT exemption. Ref. act II FSK 1250/22
Winning case before the Voivodeship Administrative Court
on alleged abuse of VAT law. Ref. no. III Sa/Wa 203/22
Judgment of the Supreme Administrative Court, ref. no. I FSK 1816/20
The court objected to the very common approach among the tax authorities, but also often among the courts, of attributing an implicit awareness of participation in a fraud by pointing out that the evidence on the record did not show that such awareness existed. The court ordered that very precise criteria be taken into account that would make such awareness of fraud plausible.
Judgment of the Voivodeship Administrative Court in Warsaw (III SA/Wa 2555/20)
Judgment on abuse of rights. The court questioned the authorities' instrumental attempts to apply the concept of abuse of rights, pointing out that the conditions for abuse were not met in the evidence on the record.
Winning case before the CJEU. C-395/09
The right to deduct input tax when purchasing services from countries considered to be tax havens, Oasis East Ltd.
Winning case before the CJEU. C-395/09
The incompatibility with Community law of Polish provisions concerning the restriction of the right of entrepreneurs to deduct VAT on the purchase of passenger cars and fuel for them, Magoora Sp. z o.o.
Winning case before the CJEU. C-313/05
Excise duty levied on imported second-hand cars in connection with their first registration in Poland, Maciej Brzezinski
Most conducted and won cases when representing taxpayers before the CJEU among all Polish attorneys.
Jerzy Martini - author and co-author of Commentary on the VAT Directive (Unimex ed.)
Jerzy Martini - author, co-author and editor of Commentary to the VAT Act (publ. C.H.Beck)
Jerzy Martini - author and co-author of "VAT in the jurisprudence of the European Court of Justice" (publ. C.H.Beck)
Marek Wojda - co-author of Commentary on the VAT Directive (Unimex ed.) and the VAT Act (C.H.Beck ed.)
Featured in the 'Law firm on Linkedin - a practical guide' by legal marketing agency Tomczak Stanisławski.
Repeatedly recognised in the rankings of Rzeczpospolita and Dziennik Gazeta Prawna.
We teach at universities, including the School of Economics
Jerzy Martini honoured annually in the prestigious Chambers & Partners ranking, indicated as Band I (highest possible level) in the individual ranking of tax advisers in the Tax Consultants category.