Tax Blog

Withholding tax (WHT) in Poland has undergone significant changes in recent years. Since 1 January 2022, a new mechanism called “pay and refund” applies to certain cross-border payments. This system has major implications for foreign investors, expats, and multinational companies receiving dividends, interest, or royalties from Poland.

What will change? The draft introduces a restriction on the exemption from taxation of the sale of property by a family foundation in order to prevent the use of foundations for quick, tax-neutral sales of assets. Income from the sale of property contributed free of charge or acquired from a related entity by a family foundation will be subject to 19% CIT if it occurs within 36 months.

Moving to Poland for work or business can be a big step, but it comes with a powerful tax incentive. Under the Polish Return Tax Relief (ulga na powrót), individuals who become Polish tax residents after living abroad can enjoy up to PLN 85,528 of tax-free income each year for four consecutive years.That’s over PLN 342,000 of completely tax-free income. This benefit applies both to both employees and entrepreneurs, making it one of the most attractive relocation incentives in Europe.MartiniTax helps both expats and returning Polish citizens to qualify for the relief with all the steps necessary.

The IP Box (Innovation Box) is a special tax regime introduced in Poland in 2019 under the Corporate Income Tax Act and the Personal Income Tax Act. It allows qualifying income from eligible intellectual property to be taxed at a preferential 5% rate instead of the standard rates (19% /9% CIT and 12%-32% PIT or 19% PIT). The aim is to encourage innovation, R&D, and the development of new technologies in Poland.

In its new ruling, the CJEU addressed, in particular, the issue of determining the VAT tax base when a taxpayer incorrectly considered its supply to be exempt instead of applying the correct VAT rate. The case in question concerned a Hungarian taxpayer selling goods to purchasers who were not residents of the European Union. The sale in question was eligible for VAT exemption if certain conditions were met. In particular, the seller had to complete a tax refund application form at the request of the foreign traveller. After exporting the goods outside the European Union, the taxpayer refunded the VAT amount indicated on the invoice to the buyers.

From January 1, 2026, changes to the rules for settling costs related to passenger cars in business activities will come into force. The new regulations make depreciation and leasing cost limits dependent on the vehicle’s CO₂ emissions. The new regulations will apply to all vehicles entered in the fixed asset register after December 31, 2025. For cars purchased and entered in the register before that date, the current depreciation rules will remain in force. However, the legislator has not provided for transitional provisions with regard to operating leases and long-term rentals. In practice, this means that from January 2026, there is a risk that lease payments for cars with CO₂ emissions exceeding 50 g/km will be settled according to the new, lower limit of PLN 100,000, even if the agreement was concluded earlier.  

The Council for Counteracting Tax Avoidance has published its first opinion directly concerning practices related to the use of family foundations for asset transfers. This event is significant not only because of the precedent set by the new body issuing an opinion, but also because of the content of the conclusions presented therein. The resolution was drafted at the request of the Head of the National Tax Administration, who pointed to serious doubts regarding the actions taken by the founder and the management board of a family foundation in relation to the rapid transfer of shares, their sale, and the payment of the proceeds to the founder in the form of a benefit. The Council’s position is of particular interest to owners of family foundations and their advisors, as it sets a practical direction for interpreting the anti-tax avoidance clause in the case of the sale of property by family foundations.

The Council of Ministers has adopted further draft laws included in the deregulation package. Among them are two bills providing for changes in income taxes and inheritance and gift tax. They were referred for the first reading at the Polish Parliament on May 21, 2025. According to the drafts, the new income tax regulations are to take effect on January 1, 2026, while the changes in inheritance and gift tax are to take effect 14 days after the date of publication in the Journal of Laws of the Republic of Poland.