Local minimum income tax

What is the minimum income tax?

The minimum income tax will be applicable to companies with Polish tax residency and domestic tax capital groups that in the tax year:

incurred a loss from a source of income other than capital gains or,
achieved less than a 2% share of income from a source of revenue other than capital gains in their income other than capital gains.

The rate is 10% of the tax base.

From when does the minimum corporate income tax apply?

The minimum corporate income tax applies from 1 January 2024 which means that companies with a tax year equal to the calendar year will pay the tax in 2025.

For taxpayers with a tax year other than the calendar year that started before 1 January 2024 and ends after 31 December 2023, the minimum corporate income tax will be due for the directly following tax year.

Who is affected by Polish minimum tax?

Polish minimum tax may burden companies in those segments of the economy that are characterized by low profitability or periodic losses, i.e., the industries:

HoReCa (hotel and catering industry),
transportation,
real estate,
industrial,
processing,
wholesale and retail trade,

Who will not pay the minimum CIT tax?

The minimum CIT tax will not be paid by:

small taxpayers (with revenues of up to EUR 2 million),
newly established companies for the first three years of operation,
taxpayers whose revenues in a given tax year were 30% lower than in the previous year,
companies operating in the health, municipal and financial sectors (e.g., banks),
entities in bankruptcy, liquidation or restructuring proceedings,
companies with a simple ownership structure,
companies belonging to a group with a combined profitability ratio of more than 2%.

How to calculate the minimum income tax?

Each taxpayer of minimum income tax is required to determine the tax base on its own, with two methods provided for in the legislation:

basic and
simplified.

The tax base (in both variants) should be reduced by:

– the value of deductions reducing the income tax base (all tax reliefs, except for bad debt relief),

– revenue generated because of business activities covered by a permit to operate in a Special Economic Zone or a decision on support for new investment,

– revenues which are not included in the calculation for the purpose of verifying the conditions for taxation of the entity with the minimum income tax (e.g., revenues from the sale of receivables to financial entities).

Payment deadline for minimum income tax

Taxpayers with a tax year equal to the calendar year will pay the minimum income tax for the first time by 31 March 2025.

Taxpayers with a tax year other than the calendar year will pay the minimum income tax by the end of the 3rd month counted from the last month of the tax year for which the minimum tax is due (i.e., before the deadline for filing their CIT-8 return).

The minimum income tax is payable once – at the end of the year. There is no obligation to make advance tax payments during the tax year.

How can we help?

Preparation for the calculation of the minimum tax, among other things, through training for capital groups (including entities with extensive company structures) for financial managers and employees - we already have experience in organizing such training for our clients.

Determine the applicability of minimum tax exemptions, including related-party provisions.

Calculation and support in calculating loss and profitability for minimum tax purposes.

Analyze whether the group charges incurred affect the tax base and whether the loss incurred is related to the group operating model adopted.

Calculation of the tax base and the minimum tax itself, taking into account statutory deductions.

The detailed identification of related parties, together with the preparation of an appropriate procedure ready for implementation in the organization and a checklist that will easily indicate how to correctly identify relationships. We also offer our clients a linkage test and a case-by-case assessment of their existence.

All ongoing concerns about the minimum tax.