POLAND Law and Practice Contributed by: Piotr Augustyniak, Nash Concept Ltd
1. Tax 1.1 Tax Regimes Income Taxation of Individuals
immediate family are exempt from personal income tax. Trusts do not exist in domestic law; the treatment of foreign trusts and foundations is described in 3. Trusts, Foundations and Similar Entities . 1.2 Exemptions The Immediate-Family Exemption The central exemption of the Polish transfer tax sys - tem covers acquisitions by the so-called zero group: the spouse, descendants, ascendants, siblings, step - children and stepparents. The exemption is unlimited in amount but conditional: the acquisition must be reported to the tax office within six months, and gifts of money must be evidenced by a bank transfer or postal order. Failure to satisfy these formalities results in taxation under the general rules for tax group I, so that the exemption is, in practice, as much a matter Where the exemption does not apply, tax is charged only on the value above the allowances, which cur - rently amount to PLN36,120 for tax group I, PLN27,090 for tax group II and PLN5,733 for tax group III, aggre - gating all acquisitions from the same person within five years. Further reliefs include an exemption of up to 110 square metres of a dwelling acquired by close relatives who undertake to reside in it, an addi - tional allowance for gifts within group I applied to the donee’s housing purposes, and an exemption for the acquisition of an enterprise by heirs who continue to operate it for at least two years. Payments for health or education do not benefit from a separate exemp - tion, although the performance of statutory mainte - nance obligations falls outside the scope of the tax altogether. 1.3 Income Tax Planning of discipline as of relationship. Allowances and Further Reliefs Polish law does not provide an instrument for stepping up the basis of appreciated assets to fair market val - ue; planning therefore relies on exemptions, holding periods and the choice of vehicle. The sale of privately held real estate is exempt from income tax after five years, counted from the end of the year of acquisi - tion, and the sale of movables after six months; within the five-year period, reinvestment of the proceeds in the taxpayer’s own housing purposes is exempt. For entrepreneurs, the distribution-based corporate
Polish residents are taxed on their worldwide income under the Personal Income Tax Act. General income (employment, pensions, most business profits) is taxed at progressive rates of 12% and 32%, with the higher rate applying to income above PLN120,000 and a tax-free amount of PLN30,000. Entrepreneurs may instead elect a flat 19% rate or a revenue-based lump sum, with rates depending on the type of activ - ity. Capital income – dividends, interest and gains on securities – is taxed separately at a flat rate of 19%. A solidarity levy of 4% applies to the excess of most categories of income above PLN1 million per annum. Persons transferring their residence to Poland may elect a lump-sum tax of PLN200,000 per annum on their entire foreign income, a regime discussed in 1.4 Pre-Immigration and Exit Planning and, in great - er detail, in the Trends and Developments chapter. Poland levies no net wealth tax; recurrent taxation of real property is based on surface area rather than value. Transfer Taxation Poland taxes gratuitous transfers through the inherit - ance and donation tax, which is charged to the indi - vidual acquirer rather than to the estate. The rate depends on the family relationship between the par - ties, expressed in three statutory tax groups, and ranges from 3% to 20% of the value acquired above the applicable allowance; members of the immedi - ate family are wholly exempt, subject to notification (see 1.2 Exemptions ). There is no estate tax and no generation-skipping transfer tax: an acquisition by a grandchild is taxed in the same tax group as an acqui - sition by a child. Entities Corporate income tax is levied at 19% (9% for small taxpayers), with an optional distribution-based regime modelled on the Estonian system. The family founda - tion, available since May 2023, is exempt from cor - porate income tax within its permitted activity; a tax of 15% arises on distributions to beneficiaries and on hidden profits, while distributions to the founder’s
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