Minimum tax returns as of January 1, 2024

The legislator has exempted taxpayers from paying the minimum income tax for the period from January 1, 2022 to December 31, 2023.[1] However, this exemption will cease to apply from January 1, 2024.

Therefore, you should check whether the minimum income tax – in less than 3 months – will start to apply to you.

Who is affected by the minimum tax?
Polish tax residents, non-residents conducting business through a foreign permanent establishment located in Poland, and tax capital groups that in a given tax year:

  • incurred a loss from a source of income other than capital gains, or
  • achieved a share of income from a source of income other than capital gains in income other than capital gains of no more than 2%,

When calculating the aforementioned loss and revenue share, among other things, the following are not taken into account:

  • costs included in deductible expenses, including through depreciation write-offs, resulting from the acquisition, manufacture or improvement of fixed assets or the use of fixed assets under a lease agreement, if the depreciation write-offs are made by the lessee;
  • an increase in deductible expenses for the purchase of electricity, heat or line gas (representing the positive difference between the deductible expenses incurred on this account in the tax year for which the minimum tax is due and the expenses incurred on this account in the preceding year);
  • excise tax, retail sales tax and gaming tax paid;
  • 20% of the tax-deductible expenses referred to in Article 15, paragraphs 4g-4h of the CIT Law[2] (so-called employee expenses).

Tax base and rate

The tax base for the minimum tax is one of the following:

  • The sum of the following, viz:
    • the amount of 1.5% of income from the source of income other than capital gains earned in the tax year;
    • the costs of intangible services incurred directly or indirectly for the benefit of related parties or from tax havens, or the costs of acquiring certain intangible services or rights, to the extent that their value exceeds PLN 3 million, and 5% of tax EBIDTA;
    • the amount of debt financing costs incurred for the benefit of related parties in the portion exceeding 30% of tax EBIDTA;
  • An amount equivalent to 3% of the value of income earned in the tax year from a source of income other than capital gains.

The taxpayer has the right to choose one of the above-mentioned ways of calculating the minimum tax base.

The minimum income tax is 10% of the tax base.

Taxpayers not subject to the minimum tax include:

  • those taxed under the Estonian CIT;
  • who are parties to a co-operative agreement;
  • who have recently commenced operations – in the tax year of commencement and two subsequent tax years;
  • who have earned revenues that are at least 30% lower than those earned in the previous year;
  • who are small taxpayers;
  • whose shareholders, stockholders or partners are exclusively natural persons, and the taxpayer itself does not own (directly or indirectly) more than 5% of the shares (stocks) in the capital of another company or all rights and obligations in a company that is not a legal person or other property rights of a fiduciary nature;
  • being part of a group of at least two companies, in which one company holds directly or indirectly at least 75% of the share capital of the other companies in the group for the entire tax year, and the share of the companies’ total income in their total income is greater than 2%.

[1] For taxpayers whose tax year is other than a calendar year and began before January 1, 2024 and will end after December 31, 2023, the exemption applies until the end of that tax year.

[2] The Law on Corporate Income Tax of February 15, 1992, as in effect on January 1, 2024.