Estonian CIT – conditions in 2022 in Poland
February 10, 2022
What are the conditions for Estonian CIT in 2022 in Poland?
Estonian CIT, also known as a lump sum on the income of capital companies, allows a company to avoid paying income tax until the profit is distributed or the loss is covered. Only when there is the profit distributed (or the loss is covered) that arose when the Estonian CIT tax was not applied, an enterprise is obliged to pay the tax. A taxpayer’s choice of this form of taxation is voluntary, and the company should notify the head of the competent tax office of its choice by the end of the first month of the tax year in which it plans to use Estonian CIT. However, if the taxpayer decides for a change during the tax year, then it is mandatory to balance the books for that day. prepare a financial statement and settle traditional CIT.
Estonian CIT – when cannot be applied?
Estonian CIT, called a lump sum on the income of capital companies, has been in force in Poland since 2021. While this solution is economically profitable for many, the choice of this form of taxation is not possible for some entities at all.
Below we present the conditions without which taxation with Estonian CIT is not possible.
| LEGAL FORM | Joint-stock companies, limited liability companies, limited partnerships as well as limited joint-stock partnerships |
| REVENUE | Last fiscal year revenue lower than PLN 100 million (including VAT), coming in less than half of: - receivables - interest and other benefits on loans - the interest part of the leasing installment - sureties and guarantees - copyrights - sale and realization of financial instruments - transactions with related entities |
| EMPLOYMENT | Employing at least 3 people under a full-time employment contract for at least 300 days in a calendar year. If the financial year does not coincide with the calendar year - for at least 82% of the days in the tax year. |
| EQUITY COMMITMENT | The taxpayer must not have shares or stocks in other companies. |
| INVESTMENT OUTPUTS | The amount of expenditure must be at least 15% of the initial value in two consecutive tax years, but not less than 20,000. PLN, however, they must be expenditure on fixed assets from groups 3-8 KŚT |
| INCREASE IN REMUNERATIONS | It is an alternative to the obligation to incur expenditures on investments, but only if the taxpayer incurs expenses for the remuneration of natural persons employed (not partners) by at least 20% (but not less than PLN 30,000) in relation to these expenses in the year preceding the two-year lump sum taxation period . |
| REPORTING | Obligation to keep accounting books and prepare financial statements. |
| EXCLUSIONS | This form of taxation is not possible in the case of: - loan institutions - financial companies - bankrupt or liquidation taxpayers - taxpayers who derive their income in a special economic zone or the Polish Investment Zone - taxpayers who participated in a merger, division or transformation |
| NOTIFICATION AT THE TAX OFFICE | Notification for a period of 4 years (possibility of extension) is submitted to the Tax Office according to a specific formula. The deadline for submitting the notification is the end of the 1st tax year in which the taxpayer is to be taxed with a lump sum. |
Author: Marta Mazurek
