Polish Tax Law and Tax Obligations of Foreign Investors

Entrance

Poland, being an EU member and having a developing economy, is an attractive destination for foreign investors. However, the most critical element for investors operating in Poland the proper management of tax obligations.

For Turkish investors, Poland offers a safe investment area thanks to both the advantage of being in the EU market and the Turkey-Poland double taxation avoidance agreement

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I. General Structure of the Polish Tax System

• Primary Income Tax (PIT): Applies to individual incomes.

• Corporate Income Tax (CIT): Tax on company earnings.

• Value Added Tax (VAT): Tax levied on goods and services.

• Property Tax: This tax is levied by local governments on real estate.

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II. Income Tax (PIT)

• Residents are taxed on all their worldwide income.

• Non-residents are only responsible for income originating from Poland.

• Rates: 12% – 32% (as of 2025).

• Self-employment income, rental income, and capital gains are included.

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III. Corporate Income Tax (CIT)

• Rate: Standard 19%.

• 9% discount for small businesses.

• Having the company's headquarters or management located in Poland results in taxation.

• Double taxation avoidance agreements can reduce the burden of CIT (Contractual Inventory).

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IV. Value Added Tax (VAT)

• Standard rate: 23%.

• Discounted rates: 8% and 5% (food, medicine, books, etc.).

• Exports are subject to 0% VAT.

• There is a reverse charge mechanism in intra-EU trade .

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V. Property Tax

• They are purchased by local municipalities.

• This applies to land, buildings, and commercial properties.

• It should be included in investors' annual financial planning.

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VI. Tax Status of Foreign Investors

1. Resident Investor

• Individuals/companies residing or headquartered in Poland.

• They are taxed on all their income.

2. Non-Resident Investor

• It is only taxed on income originating from Poland.

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VII. Double Taxation Avoidance Agreements

• Turkey and Poland a Double Taxation Avoidance Agreement dating back to 1993 .

• The aim is to prevent paying taxes twice on the same income.

• It includes provisions for rent, dividends, interest, and business income.

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VIII. Foreigners' Real Estate Investments and Tax Aspects

• A 2% title deed tax applies to real estate purchases.

• New homes are subject to either 8% or 23% VAT.

• Income tax on rental income.

• Capital gains tax on sales.

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IX. Transfer Pricing

• The arm's length principle applies to transactions between group companies

• Documentation is mandatory.

• Otherwise, there are penalties.

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X. Withholding Tax

• A 19% withholding tax is applied to dividends, interest, and license income.

• It can be reduced through a double taxation agreement.

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XI. Capital Gains Tax

• This applies to stock sales, real estate sales, and investment gains.

• Rate: 19%.

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XII. Special Advantages for Turkish Investors

• With a double taxation agreement, there is no double taxation burden.

• Poland enjoys free trade advantages.

• Tax incentives for logistics and manufacturing investments .

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XIII. Tax Planning and Legal Consulting

• Choosing the right company model during the incorporation phase (Sp. z oo, SA, branch).

• Leveraging agreements to reduce the tax burden.

• Avoiding criminal risks through professional advice.

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XIV. Sample Scenarios

• Scenario 1: A Turkish investor established a company in Warsaw → paid 19% CIT, and was exempt from taxes in Turkey through a double taxation agreement.

• Scenario 2: A Turkish entrepreneur purchased real estate in Krakow → declared rental income in both Poland and Turkey, and avoided double taxation through an agreement.

• Scenario 3: A Turkish logistics company opened a warehouse in Poland → benefited from a VAT refund.

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XV. Frequently Asked Questions

• What is the corporate tax rate in Poland? → 19%, 9% for small businesses.

• Do Turkish investors pay double tax? → ❌ No, this is prevented by agreement.

• What is the VAT rate? → 23% (standard), 8% and 5% (reduced).

• Is income from real estate taxable? → ✔ Yes.

• What are tax penalties? → Underreporting, incorrect documents → financial and criminal sanctions.

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Conclusion

Polish tax law presents both opportunities and risks for foreign investors.

The most critical advantage for Turkish investors the double taxation avoidance agreement . However, since the tax system is complex, professional tax and legal advice is essential for success.