Genel arşivleri - Page 2 of 3

Polish „ZUS” Holidays – Everything You Need To Know About It

On March 19, 2024, the Polish government approved a bill to amend the social insurance system law and some other laws prepared by the Ministry of Development and Technology.

This amendment aims to introduce so-called ZUS (Polish social insurance institution) contribution holidays from October 1, 2024, for the smallest businesses (micro-enterprises), which involves exemption from paying ZUS contributions for one selected month each year.

The government estimates that about 1.7 million people will take advantage of this opportunity within the current year.

This article provides essential information on ZUS holidays, focusing on the legal framework, eligibility criteria, and the implications for entrepreneurs conducting their business in Poland.

What Are the ZUS Holidays?

ZUS holidays are a financial relief measure intended for entrepreneurs running sole proprietorships. Under this plan, they can skip paying contributions for mandatory social insurance for a month once a year.

This optional benefit is available to all micro-entrepreneurs (including the self-employed) registered in the CEIDG.

What do ZUS contribution holidays entail?

A micro-entrepreneur can choose any month of the year to not pay ZUS contributions, the Labor Fund, and the Solidarity Fund contributions. The government budget will cover the contributions for that month

Who is considered a micro-entrepreneur?

The status of a micro-entrepreneur is assigned to entrepreneurs who have met the following criteria simultaneously in at least one of the past two fiscal years:

Employed an average of fewer than 10 employees annually
Achieved an annual net turnover from the sale of goods, products, services, and financial operations that did not exceed the equivalent of 2 million euros in Polish zloty, or the total assets on their balance sheets prepared at the end of one of those years did not exceed the equivalent of 2 million euros in Polish zloty.

What are the limitations of ZUS Holidays?

It’s important to note that this relief does not include health insurance contributions, which means:

Entrepreneurs who opt for the contribution holidays must continue to pay health insurance contributions for the chosen month
The amount of health insurance contributions remains unchanged
The deadline for health insurance contributions will not change.

Another limitation arises when the basis of contribution assessment previously declared by the entrepreneur is higher than the lump sum for the given year. In such cases, during the month when the individual benefits from the proposed solution, the state’s financial support will be reduced to the lowest applicable assessment base for that insured person.

It’s worth noting that while benefiting from this relief, the entrepreneur is not required to suspend their business operations, meaning they can continue to generate revenue.

The exemption is intended to serve as public aid implemented under the de minimis rule. This implies that entities that have already reached their de minimis aid limit will not be eligible for the contribution holidays.

Contribution holidays are also to be available for individuals working under B2B agreements, but there is an exception – it does not apply to individuals who have performed or were performing activities in the previous calendar year for their former employers. This restriction aims to prevent the so-called pushing of employees into self-employment. However, this limitation does not apply if the services provided do not overlap with the activities previously carried out as an employee.

Importantly, the contribution holidays pertain only to the entrepreneur themselves, not to individuals insured by them, such as employees.

The Ministry of Development explains that this restriction is aimed at preventing the phenomenon of “pushing employees into self-employment,” which occurs when employers force their employees to quit their job contracts and start a business to avoid employment obligations.

ZUS Holidays and Tax Treatment

Good news for micro-entrepreneurs – they can benefit from “contribution holidays” regardless of their chosen method of income tax settlement. This includes:

PIT: Individuals settling taxes under general, flat rate, or lump sum income tax on business revenue.
Lump sum on business revenues: Those who have opted for this simplified tax form.
Tax card: Individuals who settle taxes in this manner.

The Ministry of Development states that the relief in the form of “contribution holidays” applies solely to the entrepreneur’s social insurance contributions and does not cover individuals insured by the entrepreneur.

Applying for ZUS Holidays

To take advantage of this relief, it will be necessary to submit an application to ZUS. The application must be submitted in the month preceding the selected “contribution holiday” month. A detailed application form and instructions will be available on the ZUS website.

The Polish Prime Minister announced that this year entrepreneurs will be able to take advantage of ZUS rest holidays. He expressed confidence that within the next four months, the Social Insurance Institution will sort out IT issues to make this option available to entrepreneurs. However, he emphasized that applications for leave must be submitted by the end of November.

It is important to follow further announcements from ZUS and the government regarding the details of this new benefit.

Conclusion

In conclusion, the introduction of ZUS holidays by the Polish government is a significant development for micro-entrepreneurs across Poland. Starting from October 1, 2024, this initiative offers a practical benefit allowing eligible entrepreneurs to opt out of paying specific social insurance contributions for one month each year. Although the plan does not cover health insurance contributions, it provides substantial financial relief, potentially enhancing the liquidity and operational flexibility of small business owners.

Adwisen offers you professional assistance with applying for the ZUS Holidays relief.

Polish Compulsory Social Insurances (ZUS) – A Practical Guide

Starting a business in Poland results in a lot of opportunities as well as regulatory obligations, one of which includes participating in the compulsory social insurance system. As an entrepreneur, understanding these requirements is not just about compliance – it’s about smart planning and management. Here’s an essential guide to help you understand the complexities of Polish social insurance.

What Are the Compulsory Social Insurances?

In Poland, compulsory social insurance is a statutory requirement for entrepreneurs and their employees, aimed at providing financial security in cases of sickness, maternity, disability, old age, and accidents at work. These insurances are managed by the Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS). Participation in this system is not optional but a legal obligation for most types of business activities.

Key Components of the System

Pension insurance (emerytalne) – accumulates funds for your retirement. Both employers and employees contribute to this fund. As an entrepreneur, you are responsible for your contributions as well as deducting and remitting your employees’ shares
Disability insurance (rentowe) – covers the insured in the event of disability caused by illness or accident. It ensures financial support if the work capacity is lost
Sickness insurance (chorobowe) – provides cover for income lost due to temporary inability to work due to illness. Opting for sickness insurance is mandatory for employees but optional for business owners
Accident insurance (wypadkowe) – specifically designed to provide benefits to employees who suffer from work-related accidents or diseases. The rate varies depending on the risk associated with the type of work
Health insurance (zdrowotne) – while technically separate from the social insurance system and managed by the National Health Fund (NFZ), it is compulsory and closely linked. It provides access to medical services

Which Entrepreneurs Have To Pay Contributions To the Social Insurance Institution (ZUS)?

An entrepreneur registered with CEIDG including a partner in a Civil Code partnership
A partner in a single-member limited liability company
A partner in a general partnership, limited partnership, or in a partnership
A shareholder in a simple joint-stock company who contributes to the company, in the form of the provision of labor or services
A general partner in a limited joint-stock partnership
A freelancer
A creator or an artist.

Exception- concurrence of insurance (having other titles to insurance) e.g. working as a full-time employee.

An entrepreneur may start a business activity on the day of applying for entry to business activity records, except where the provisions of the Act make starting and running a business activity dependent on obligations obtaining a license or permit by the entrepreneur.

A person conducting non-agricultural activities is subject to compulsory insurance social: retirement, disability, and accident insurance, from the date of commencement conducting business activities until the date of cessation of this activity, excluding the period for which the activity was performed suspended under the provisions of the Act on the social security system) and the provisions of the Entrepreneurs’ Law. The sickness insurance is voluntary.

Contribution Rates and Obligations

The basis for calculating social security contributions in 2024 for a sole proprietorship is the declared amount, not lower than PLN 4,694.40 (60% of the forecast average monthly salary).

The amount of the forecast average salary in 2024 is PLN 7,824.

For January – December 2024, the social security contribution of persons listed in group II cannot be lower than the amount:

PLN 916.35 /i.e. 19.52%/ – for pension insurance
PLN 375.55 /i.e. 8%/ – for disability insurance
PLN 115.01 /i.e. 2.45%/- for sickness insurance.

What are the ZUS Contributions During the Suspension of Your Business?

During the suspension of your business activity, you do not pay contributions because you are not covered by ZUS insurance.

Before you apply to suspend your business activity, consider what date you want to do it. If you suspend your business during the month, you will have to pay:

Health insurance premium for the entire month
Social security contributions in proportion to the number of days on which your business was active in a given month – during the suspension period, which lasts for part of the month, the amount of the lowest basis for assessing contributions is reduced proportionally by dividing it by the number of calendar days of the month and multiplying it by the number of days you are subject to insurance.

The right to health services expires 30 days after the end of the period of health insurance coverage. Therefore, if you want to have the right to health services during the suspension period, you should voluntarily apply for insurance from the National Health Fund (if you are not insured under another title, e.g. an employment contract or mandate).

Contribution Reliefs for People Starting a Business

New business owners can benefit from social security contributions reliefs, such as “Ulga na Start” (“Start-up relief”), preferential contributions, or “Mały ZUS Plus” (“Small ZUS Plus”). However, it is essential to know that those reliefs don’t apply to health insurance.

“Ulga na Start”

If you are a beginner entrepreneur, you can benefit from a start-up tax relief. For the first 6 months of running a business, you can benefit from exemption from social security contributions (i.e. retirement, disability, and accident insurance contributions). A decision to take advantage of the reliefs will affect the amount of benefits a person is entitled to (sickness, disability, pension). By paying lower premiums today, a person will receive lower benefits in the future.

Who can benefit from the start-up relief?

A natural person (i.e. you run a sole proprietorship or a partner in a civil partnership)
People starting a business activity for the first time or starting it again after at least 60 months from the date of its last suspension or termination
People not carrying out activities for a former employer for whom they worked full-time in the current or previous calendar year and performed activities falling within the scope of their current activity
People not insured by KRUS (social security institution dedicated to farmers).

Preferential ZUS Contributions

After 6 months of using the start-up relief, you still do not have to pay the full amount of social security contributions. You have the opportunity to take advantage of an already existing solution, i.e. preferential ZUS contributions.

This means that for the next 24 months, the basis for calculating contributions will be the declared amount, which cannot be lower than 30% of the minimum wage.

From January 2024, the base cannot be lower than PLN 1,272.60, and contributions amount to PLN 402.65.

“Mały ZUS Plus”

If you run a business based on an entry in CEIDG and your revenues in the previous year did not exceed PLN 120.000, you can take advantage of the “Mały ZUS Plus” relief.

This means that for a maximum of 3 years within 5 years, you will pay social security contributions proportional to the income obtained in the previous year. The lowest contribution basis in this case is 30% of the minimum wage. It cannot exceed 60% of the forecast average salary, i.e. the amount appropriate for full ZUS contributions.

What about conducting temporary business activity in Poland?

If your business is based in a member state of the European Union, the European Economic Area, or Switzerland, and you are temporarily conducting business activities in Poland, you are not required to register with the Polish social insurance system.

The A1 form serves as proof that Polish social insurance regulations do not apply to you. This form is issued by an institution similar to the Polish Social Insurance Institution (ZUS) in your home country, where your business is primarily established. It indicates the duration for which you are covered under your home country’s social insurance legislation.

Voluntary social insurance

Coverage by voluntary insurance: pension, disability, and sickness insurance takes effect from the date indicated in the ZUS ZUA registration, but not earlier than the day on which this registration was submitted to ZUS.

Furthermore, coverage by voluntary sickness insurance takes effect from the date indicated in the ZUS ZUA registration, provided that registration for mandatory pension and disability insurance is made within 7 days from the onset of the obligation of these insurances.

In the case of individuals conducting business activities, coverage by voluntary sickness insurance can take effect from the date indicated in the registration, provided that registration for mandatory pension and disability insurance is completed by the end of January of the given year, if the business activity was started or resumed in January and the person benefits from “Small ZUS Plus”. However, if there are less than 7 days left until the end of the month – within 7 days.

Managing Your Contributions

Managing your social insurance obligations requires diligent administration. Ensure that you:

Register yourself and any employees with ZUS when you start your business or hire
Regularly update your earnings information to ZUS, as this impacts your contribution rates
Make timely payments to avoid penalties. The deadlines are strictly enforced.

Conclusion

Understanding and managing compulsory social insurance in Poland can be challenging but is crucial for running a successful business. While this guide provides a foundation, staying informed about the latest changes in legislation is essential.

Consider consulting with a legal expert specializing in Polish business law to tailor your approach to compliance. This proactive step can safeguard your business against unforeseen liabilities and ensure smooth operational flow. Adwisen offers you professional assistance every step of the way.

The 20th Anniversary of Poland’s Accession to the European Union. What Did it Mean for The Polish Economy?

What is the European Union (EU)?

The European Union (EU) is an alliance that encompasses both political and economic collaboration among its 27 Member States located mostly in Europe. It seeks to ensure the free movement of people, goods, services, and capital, promote judicial cooperation, and maintain common policies on trade, agriculture, and regional development.

European Union’s History & Aim

Discussions about creating a common European organization started during the Second World War, with one main intention in mind, peace on the Old Continent. The rationale was to create a common market and an European economy, which would make it unreasonable to go to war with neighboring countries. Instead, trade facilitation and repairing relations by common investments was meant as a remedy to the horrors of the early 20th century.

EU Member States

In summary, originally six states started an ‘European Coal and Steel Community’ in 1952, Germany, France, Italy, the Netherlands, Belgium, and Luxembourg. The ECSC would later evolve into the modern European Union, which comprises 27 Member States.
Moreover, further enlargement is expected with Albania, Montenegro, North Macedonia, Serbia, Bosnia and Herzegovina, Ukraine, and more. Accession talks were however stopped with Turkey, due to EU’s concerns about Turkey’s democracy quality.

Poland’s Joining the Community

Poland joined the European Union on 1 May 2004, with 77.6% of citizens voting ‘YES’ in the 2003 Referendum. This event is regarded as one of the most important in the modern history of Poland.

Economic and Legal Benefits of EU Membership

Freedom of Goods Movement

Since joining the EU, Poland has tapped into a vast market of nearly 500 million consumers, significantly boosting its trade capacity. In 2022, Poland’s exports surged to EUR 343.8 billion, underlining its increased trade activities primarily with other EU countries, which accounted for 75.8% of exports [Stat.gov.pl] The EU’s single market has also driven technological and quality enhancements across various sectors.

Freedom of People Movement

EU membership has allowed for easier labor emigration, as the EU nationals can travel and work freely in other Member States. It is common for Poles to travel to Germany or the Netherlands for employment with zero or minimal restrictions and documents, all because of the creation of an EU citizenship, which is granted automatically to anyone who holds the nationality of an EU country.

EU Law Effect

Because of the direct and indirect effect of EU law, the Polish national courts must uphold and enforce EU laws. This means safeguarding against potential abuses by employers, or the state, and enhancing the legal predictability for business operations, for a common European standard.

Freedom of Capital Movement

Foreign direct investment (FDI) in Poland has shown impressive growth, with significant investments from countries like Spain, Germany, and the Netherlands. The FDI inflows reached about $29.5 billion in 2021, reflecting Poland’s appeal as a prime investment destination within the EU (Lloyds Bank Trade). The FDI in Poland is primarily concentrated in industries such as Automotive, Electronics, Information and Communication Technology, and Medtech. These industries benefit directly from the free movement of capital, allowing them to attract necessary funding and technological expertise from across the EU.

Social Benefits of EU Membership

Environmental Improvements

EU membership has compelled Poland to adopt stricter environmental standards, leading to significant improvements in air and water quality (see. EU Green Capital Finalist 2023 – Kraków). Initiatives funded by the EU have promoted sustainable development, energy efficiency, and the adoption of renewable energy sources across the country.

Technological Advancement and Research

Access to EU funding programs like Horizon 2020 has propelled Polish scientific research and innovation. Polish researchers and institutions now participate in advanced European research projects, enhancing Poland’s technological prowess and innovation capacity.

Social Cohesion and Infrastructure Development

Projects such as the European Regional Development Fund or the Cohesion Fund have been instrumental in developing Poland’s infrastructure—modernizing roads, railways, and digital infrastructure, which have been crucial for regional development and economic equality. A ‘shared financing with European Union fund’ sign is common to be seen near many investments all around Poland.

Cultural Exchanges

Programs such as Erasmus+ have not only enhanced educational opportunities for Polish students but also created a greater cultural understanding among European citizens. These exchanges strengthen the cultural ties between EU countries further promoting the original European Union’s premise. It can be observed that EU Membership is (partially) responsible for almost doubling the number of Poles seeking higher education in other Member States countries since 2004 (WENR).

Conclusion

With May 1st 2024 marking the 20th anniversary of Poland joining the European Union, it is important to look back and realize the benefits that membership provided. The economy boost, social benefits and foreign investments fulfill and are often higher than anticipated.

Poland’s commitment to these EU goals makes it an attractive destination for international investors looking for stability and growth opportunities. At Adwisen, we are here to provide assistance to help you benefit from the EU’s supportive environment.

Personal Income Tax (PIT) in Poland – A Practical Guide

Introduction

In Poland, the Personal Income Tax (PIT) system plays a very important role in the country’s fiscal framework. Understanding its aspects is essential for individuals and businesses alike to ensure compliance and manage their financial obligations effectively. This article aims to provide a practical guide to PIT in Poland, covering its fundamentals, key regulations, recent developments, and practical implications.

Fundamentals of PIT

Personal Income Tax (PIT) in Poland is governed by the Personal Income Tax Act, which outlines the tax rates, exemptions, deductions, and other relevant provisions. PIT is levied on various sources of income, including employment income, business profits, capital gains, and property income.

Taxpayers in Poland are categorized into two main income tax scales:

12% tax rate: Applicable to individuals earning up to PLN 120.000 annually (as of the tax year 2023).

32% tax rate: Imposed on income exceeding PLN 120.000 annually.

There are also several different PIT rates for various types of income, e.g. 10% on prizes or 19% for entrepreneurs taxed on a straight-line basis or for the sale of real estate.

Moreover, individuals may benefit from various tax deductions and allowances, including Internet connection deduction, thermo-modernization relief, child relief or rehabilitation expenses deduction.

Who is the Subject of PIT?

Individuals, if they reside in the territory of the Republic of Poland, are subject to tax liability on all their income (revenues), regardless of the location of the sources of income (unlimited tax liability).

Who is Considered to be a Person Residing in the Territory of the Republic of Poland?

An individual who:

Has a center of personal or economic interests (center of vital interests) in the territory of the Republic of Poland
Stays in the territory of the Republic of Poland for more than 183 days in a tax year.

Individuals who do not have their place of residence in the territory of the Republic of Poland, are subject to tax liability only on income (revenues) obtained in the territory of the Republic of Poland (limited tax liability).

Which Income is Considered to be Earned in the Territory of the Republic of Poland?

Income from:

Work performed in the territory of the Republic of Poland based on a service relationship, employment relationship, homework relationship, and cooperative employment relationship, regardless of the place of payment of remuneration
Activities performed personally in the territory of the Republic of Poland, regardless of the place of payment of remuneration
Business activity conducted in the territory of the Republic of Poland, including through a foreign establishment located in the territory of the Republic of Poland
Real estate located in the territory of the Republic of Poland or rights to such real estate, including its disposal in whole or in part or disposal of any rights to such real estate
Securities and derivative financial instruments other than securities admitted to public trading in the territory of the Republic of Poland on a regulated stock exchange market, including those obtained from the sale of these securities or instruments and from the exercise of rights arising from them
Redemption and otherwise annihilation of participation titles in capital funds established on the basis of the provisions in force in the Republic of Poland and sale of these participation titles for a fee
Title to the transfer of ownership of shares in a company, all rights and obligations in a company that is not a legal person or titles of participation in an investment fund, mutual investment institution, or other legal person and rights of a similar nature or in respect of receivables resulting from the possession of these shares (shares), all rights and obligations, participation titles or rights – if at least 50% of the value of the assets of this company, company that is not a legal person, this investment fund, this mutual investment institution or legal person, directly or indirectly, constitute real estate located in the territory of the Republic of Poland Poland or rights to such real estate
Title to the transfer of ownership of shares (shares), all rights and obligations, participation titles, or rights of a similar nature in a real estate company
Regulated receivables, including those made available, paid, or withheld, by natural persons, legal persons, or organizational units without legal personality, having their place of residence, registered office, or management in the territory of the Republic of Poland, regardless of the place of conclusion of the contract and performance of the service
Unrealized profits.

Double Taxation and How to Avoid It

The problem of double taxation concerns Polish tax residents who earn income in Poland and abroad simultaneously. They are obliged to pay tax on their income in accordance with their unlimited tax liability, i.e. pay taxes in Poland.

These taxpayers are subject to one more rule: the principle of source taxation, according to which they must also pay income tax abroad. It is this situation that gives rise to double taxation – if left this way, the taxpayer would pay two income taxes and would have little left of the money earned.

If two countries between which a double taxation avoidance agreement is concluded recognize the taxpayer as their resident and thus impose unlimited tax liability on him, the so-called collision rules.

These are provisions in the contract that help determine which country a given person is a tax resident of (you cannot be a tax resident in two countries at the same time). In most cases, the center of life’s interests is considered more important.

The full list of countries with which Poland has signed a double taxation agreement can be found on the Polish Ministry of Finance website.

Double taxation of income is prevented by methods of avoiding double taxation. When analyzing the content of double taxation avoidance agreements concluded by Poland with other countries and the acts, two methods can be distinguished:

Exclusion method with progression
Proportional deduction method.

Which of the above methods applies in a given case is determined by the relevant double taxation agreement and national tax regulations.

Tax Exemptions

The regulations name specific incomes that are not the subject of taxation, including:

Family type income (e.g. child support, family benefits, maternity benefits)
Additional income for employees
Compensations
Capital income and property rights
Income of pupils and students
Prizes and winnings.

Tax-Deductible Costs

Tax-deductible costs are expenses incurred to obtain income (e.g. commuting to work).

Income reduced by the costs of obtaining it contributes to paying less income tax to the tax office.

The final value of PIT to be paid can be illustrated by the following formula:

Income = Revenue – Costs of Obtaining Revenue

Ensuring that the value of tax-deductible costs is as close as possible to the amount of income is essential.

PIT Reporting

PIT reports should be submitted by 30th of April.

At the beginning of the year, the employer provides employees with a PIT form.

Do the employees have to settle the PIT report by themselves? The answer is – yes.

Settling the PIT report is the taxpayer’s responsibility. PIT settlement means completing and then submitting the appropriate PIT declaration to the appropriate tax office.

The document should show (based on data provided by the employer):

Revenues
Costs
Income
Paid ZUS contributions
Tax reliefs
Exemptions.

Next, the taxpayer should calculate the tax amount and compare it with the advance payments withheld by the employer. In case of overpayment, the taxpayer can expect a refund. If the tax office received an insufficient amount during the year, a transfer must be made to the appropriate account number.

You can submit the tax report on paper, sending it via post office or you can submit a digital report via the government website

Conclusion

Understanding the Polish Personal Income Tax system is crucial for individuals getting to know their tax obligations in Poland. Whether you’re a resident or a non-resident taxpayer, knowing the key concepts of PIT, such as taxable income, deductions, and rates, is essential for compliance and minimizing tax liabilities.

Adwisen offers you qualified and helpful assistance throughout the whole process

Taxes in Poland – An Overview

If you are planning to open your business in Poland, you have probably already realized that Poland has become one of the countries that interest investors the most.

This is in particular due to the large and absorbent market (36.8 million people) as well as the actions of the authorities, which support the development of business in Poland through their policies. This also applies to tax issues, which include numerous facilities for investment activities.

Running a business in Poland inevitably involves the need to regulate Polish taxes.

This article provides an overview of key tax categories in Poland, shedding light on Personal Income Tax (PIT), Corporate Income Tax (CIT), Value Added Tax (VAT), Tax on Civil Law Activities (PCC), Property Tax, Excise Tax, Withholding Tax, Transportation Tax, Inheritance and Donation Tax.

Personal Income Tax (PIT)

Deadline for Reporting

April, 30th (reporting the income achieved during the previous year).

Tax Subjects

All natural persons earning income are subject to personal income tax. In this case, it is important to distinguish between limited and unlimited tax liability.

Unlimited tax liability applies to natural persons residing in the territory of the Republic of Poland. Having a place of residence in the territory of the Republic of Poland means that a given natural person:

Has a center of personal or economic interests in the territory of the Republic of Poland (centre of vital interests)
Stays in the territory of the Republic of Poland for more than 183 days in a tax year.

Scope of Taxable Income

All types of income are subject to income tax, except for tax-free income or income on which tax collection has been waived by regulation.

Income from a source of revenue is – unless specific provisions provide otherwise – the surplus of the sum of revenues from this source over the costs of obtaining them, achieved in the tax year. If the costs exceed the total revenues, the difference is a loss from the revenue source.

Tax Rates

The progressive tax rates range from 12% to 32%, with various deductions and allowances available.

Corporate Income Tax (CIT)

Deadline for Reporting

March 31st.

Tax Subjects

CIT taxpayers are legal persons (including limited liability companies, joint-stock companies, foundations, associations, and cooperatives) and capital companies in the organization.

Scope of Taxable Income

The subject of taxation is the income (the surplus of revenues over incurred costs) that the company obtained in a given tax year.

Income is the sum of:

Income derived from capital gains
Income obtained from other sources of income.

Some income of CIT taxpayers is exempt from tax, provided that it is transferred to the statutory activities of these entities: scientific, scientific and technical, educational, including those involving the education of students, cultural, physical culture and sports, environmental protection, support for social initiatives for the construction of roads and telecommunications networks in the countryside, as well as water supply in the countryside, charity, health protection and social assistance, professional and social rehabilitation of disabled people, and religious worship. Most often, such income is obtained by associations, associations, and foundations.

Tax Rates

The PIT rates are:

19% of the tax base
9% of the tax base on revenues (income) other than capital gains for small taxpayers and start-up companies.

You can find more information on CIT here

Withholding Tax (WHT)

Deadline for Reporting

(IFT-1R declaration)- February, 28th, (IFT-2R declaration) – March, 31st.

Tax Subjects

WHT applies to flat-rate income taxes collected by payers who have their place of residence, registered office, or foreign establishment in the country where the income arises. The taxpayer is the entity that receives the cross-border payment. The payer is the person who makes the payment to the taxpayer. Therefore, Polish entities paying receivables to foreign business partners, non-residents, are obliged to collect withholding tax.

Scope of Taxable Income

Flat-rate income taxes (from natural and legal persons) are collected by payers who have their place of residence, registered office, or the so-called foreign establishment in the country where the income arises. Polish withholding tax is collected by payers who have their place of residence, registered office, or foreign establishment in Poland.

Typically, withholding tax is referred to in the context of tax levied on certain income obtained in Poland by non-residents who are natural persons or other entities. In some cases, it is also collected from residents (e.g. when paying dividends to a domestic entity).

This includes, among others: the following revenues:

In the field of corporate income tax
- Revenues obtained by non-residents, in particular from interest, copyrights, and related rights, fees for services provided in the field of entertainment, entertainment, sports, consulting, and accounting activities, as well as certain fees for the export of cargo and passengers accepted for transport in ports Polish by foreign maritime merchant shipping companies
- Obtained by both residents and non-residents, income from dividends, and other income from participation in the profits of legal persons that have their registered office or management in Poland

In terms of personal income tax

Income obtained by non-residents from maritime navigation
Inland navigation and air transport
Dividends and other income from participation in profits of legal persons
License fees
Income from freelance professions, remuneration directors
Income from artistic or sports activities
Income from pensions and other similar benefits.

Tax Rates

The Withholding rates are:

19% is the general national WHT rate for dividends. It also includes income from the liquidation of the company and redemption of shares (except for the profit from voluntary redemption, which is treated as a capital gain subject to the 19% CIT rate in Poland, if this profit is realized by a taxpayer from a country that is not a party to the agreement or the agreement contains the so-called real estate clause)
20% is the general withholding tax rate on interest and royalties paid to non-residents. (10% in the case of sea or air transport services). However, the above WHT values may be reduced by double taxation agreements. Withholding tax of 20%. also applies to payments made to non-residents for intangible services (e.g. consulting services).

Value Added Tax (VAT)

Deadline for Reporting

In the case of monthly settlements – by the 25th day of the following month, in the case of quarterly settlements – by the 25th day of the month following each subsequent quarter (April 25, July 25, October 25, January 25).

Tax Subjects

A taxpayer of the goods and services tax (VAT) is a natural person, a legal person, or an organizational unit without legal personality (e.g. civil partnership, general partnership, professional partnership, etc.) that independently conducts business activities, regardless of the purpose or result of such activity.

An organizational unit without legal personality constituting an inherited enterprise that continues to run the business of the deceased taxpayer from the opening of the inheritance until the date of expiry of the succession administration or until the expiry of the right to appoint a succession administrator, if the succession administration has not been established and an appropriate notification has been made in accordance with the Act, will also be a VAT payer on the principles of recording and identifying taxpayers and payers.

A VAT payer is also a legal person, an organizational unit without legal personality, and a natural person obliged to pay customs duties (even if the imported goods are exempt from customs duties or customs duties have been suspended or a preferential customs duty rate has been applied), entitled to use the inward processing procedure or temporary admission procedures.

Scope of Taxable Income

VAT regulations apply to the following taxable activities in Poland (the regulations specify the rules for determining the place of supply for the activities performed):

Paid delivery of goods, understood as the transfer of the right to dispose of the goods as the owner (in some cases, the free transfer of goods by the taxpayer may be considered a paid delivery)
Paid provision of services understood as any performance that is not a supply of goods (in some cases, services provided free of charge may be considered paid provision of services)
Export and import of goods into the territory of the country
Intra-community supply of goods
Intra-community acquisition of goods for consideration within the territory of the country.

Tax Rates

Poland’s standard VAT rate is 23%, with reduced rates of 8% and 5% for certain categories of goods and services.

Tax on Civil Law Transactions (PCC)

Deadline for Reporting

Within 14 days from the date of tax liability, except for cases where the tax is collected by the payer or collective declaration.

Tax Subjects

The taxpayers of the tax on civil law transactions are natural persons and legal entities and organizational units without legal personality that are parties to civil law transactions subject to taxation.

Scope of Taxable Income

Civil law activities:

Contracts for the sale and exchange of property and property rights
Loan agreements for money or items marked only as to type
Donation agreement – in the part regarding the recipient’s takeover of the donor’s debts, burdens, or obligations
Annuity contracts
Agreements on the division of inheritance and agreements on the abolition of co-ownership – in the part regarding repayments or subsidies
Establishing a mortgage
Establishing paid usufruct, including improper use, and paid easement
Irregular deposit agreements
Partnership agreements
Changes to these contracts – if they increase the tax base for tax on civil law transactions
Court decisions and settlements – if they produce the same legal effects as taxable civil law transactions.

Tax Rates

Rates vary depending on the transaction type, and taxpayers must adhere to the prescribed deadlines for PCC reporting and payment.

Real Estate Tax

Deadline for Reporting

January 31st (real estate tax for legal persons, organizational units, companies without legal personality).

Forest and agricultural taxes – for natural persons – 14 days from the date the obligation arises. Legal persons submit the declaration by January 15 of each tax year or within 14 days of the obligation arising (just like natural persons).

Tax Subjects

Property taxpayers are natural persons, legal persons, and organizational units, including companies without legal personality, which are:

Owners of real estate or buildings
Independent owners of real estate or building
Perpetual usufructuaries of land
Owners of real estate or parts thereof or buildings or parts thereof owned by the State Treasury, as well as local government units, if the possession:
- Results from an agreement concluded with the owner, the National Support Center for Agriculture, or from another legal title, except for the possession by natural persons of residential premises that do not constitute separate real estate
- Is without a legal title.

Scope of Taxable Income

The subject of real estate taxation is:

Land
Buildings, or parts thereof structures, i.e. objects that are not buildings, or parts thereof related to running a business.

Tax Rates

Local authorities determine the tax rates, which can vary between municipalities.

Excise Tax

Report deadline:

Reporting should be done:

By the 25th day of the month following the month in which the tax obligation arose
By the 25th day of the month following the month in which the excise duty suspension procedure ended, resulting in a tax liability.

Tax Subjects

Subjects of excise tax are natural persons, legal persons, and organizational units without legal personality who perform taxable activities or in respect of whom a taxable fact has occurred.

An entity that is not an importer is also a taxpayer if it is obliged to pay customs duties.

Since excise duty is an element of the price, the entity that actually bears the burden of this tax is the consumer.

Scope of Taxable Income

The subject of excise taxation is:

Production of excise goods
Introducing excise goods into a tax warehouse
Import of excise goods (in principle)
Intra-community acquisition of excise goods, excluding intra-community acquisition made to a tax warehouse
Removing from a tax warehouse, outside the excise duty suspension procedure, excise goods that are not the property of the entity running the tax warehouse
Dispatching, under the excise duty suspension arrangement, imported excise goods from the place of import by a registered consignor who is not the importer of these goods.

Tax Rates

Rates vary depending on the type of goods, and excise duty is typically included in the product’s retail price.

Inheritance and Donation Tax

Deadline for Reporting

Within one month from the date of tax liability.

Tax Subjects

Taxpayers of inheritance and donation tax are natural persons – Polish citizens or persons permanently resident in the territory of the Republic of Poland – who acquired ownership of goods and property rights through inheritance, adverse possession, or disposition of the contributor or donation.

Scope of Taxable Income

Inheritance and donation tax is subject to the acquisition by natural persons of:

Ownership of things located in the territory of Poland or property rights exercised in the territory of Poland, by:
Inheritance, ordinary legacy, further legacy, vindicatory legacy, testamentary order
Donations, donor recommendations
Adverse possession
Free abolition of co-ownership
Compulsory share if the entitled person did not obtain it in the form of a donation made by the testator or by way of inheritance or in the form of a legacy
Gratuitous: annuity, usufruct and easement
Rights to a savings contribution based on the instructions for a contribution in the event of death
Participation units based on the instructions of a participant of an open-end investment fund or a specialized open-end investment fund in the event of his death
Ownership of things located abroad or property rights exercised abroad, if at the time of opening the inheritance or concluding the donation agreement, the buyer was a Polish citizen or had permanent residence in the territory of Poland.

Tax Rates

The rates depend on the relationship between the donor/estate and the recipient, with spouses and direct descendants benefiting from lower rates or exemptions.

Transportation Tax

Deadline for Reporting

February, 15th (and if the tax obligation arose after that date – within 14 days from the date of occurrence).

Tax Subjects

Transportation Tax is levied on individuals, businesses, and entities that own transport vehicles with a permissible total mass exceeding 3.5 tons.

Scope of Taxable Income

The transportation tax encompasses a range of vehicles, including:

Trucks
Saddle tractors
Trailers

with varying permissible total masses.

The tax obligation arises when a transport vehicle is:

Registered
Acquired
Reintroduced into traffic after temporary withdrawal.

Tax Rates

The tax rates are determined by the municipal council within the limits set by the provisions of the Local Taxes and Charges Act.

The municipal council may differentiate the rates, taking into account, in particular: the vehicle’s impact on the natural environment, the year of production, or the number of seating places.

Conclusion

Understanding Polish taxes requires thoroughly analyzing each tax category and careful compliance with the associated regulations. Whether an individual taxpayer or a corporate entity, not staying informed about changes in tax laws and seeking professional advice can contribute to fiscal responsibility.

Adwisen offers you qualified and helpful assistance with any of the taxes mentioned in this article.

Mandatory Social Insurance in a Limited Liability Company (spółka z ograniczoną odpowiedzialnością; sp. z o.o.) in Poland

The resolution of the Polish Supreme Court of February 21, 2024 (case no. III UZP 8/23) shed new light on the issue of whether partners in limited liability companies are subject to mandatory social insurance, stating that a partner of a two-person limited liability company holding 99 percent of the shares is not subject to social insurance under Art. 6 section 1 point 5 in connection with Art. 8 section 6 point 4 of the Act of 13 October 1998 on the social security system.

But What Does It Mean for You and Your Company?

This article will guide you through the ins and outs of the issue of whether partners of a limited liability company are subject to social insurance and help you understand the impact of this resolution on the applicable legal situation in this regard.

The Essence of a Polish LLC

A limited liability company is a capital commercial company with legal personality.
It may be established for any legally permissible purpose by one or more partners, but it cannot be established solely by another single-member limited liability company.
Its founders may be natural persons or legal persons, regardless of citizenship and place of residence.
This form of business is suitable – for example – for partners who want to maintain direct supervision over the company’s affairs and limit the risk only to their contribution.
To establish a limited liability company capital of at least PLN 5,000 is required.

What is Social Insurance?

Social insurance is a type of insurance whose aim is to ensure social security for people who, due to the occurrence of random events specified by law (e.g. illness, disability, pregnancy, old age), cannot support themselves from their own work.

Types of social insurance in Poland depending on the type of events covered by insurance:

Pension insurance – the subject of protection is the achievement of a specified age by the insured person
Disability insurance – the subject of protection is inability to work or death of the breadwinner
Sickness insurance – the subject of protection is inability to work caused by illness, parenthood or the need to care for a family member
Accident insurance – the subject of protection is inability to work caused by an event classified as an accident at work or an occupational disease

Social security can be mandatory, voluntary or non-covering depending on your professional or social situation.

Mandatory Social Insurance for Entrepreneurs

If a person is an entrepreneur or cooperates with one, they are a subject of compulsory insurance: retirement, disability and accident insurance. Sickness insurance is voluntary for them.

Mandatory Social Insurance in a Limited Liability Company

The legal definition of an entrepreneur includes shareholders of a single-member limited liability company and partners in a general partnership, limited partnership, or partnership. Therefore, the law does not apply to all types of capital companies, but only to a single-member limited liability company. However, this requirement does not apply to every kind of business, but specifically to those who are the sole owners of a limited liability company.

Two-person Limited Liability Company and Social Insurance Obligations

When it comes to a two-person limited liability company, regardless of the number and value of their shares, the shareholders do not fall under the literal regulations of social insurance. The Polish law does not provide for such a title for insurance, namely the title of a shareholder of a two-person limited liability company.

According to the regulations, only shareholders of single-member limited liability companies are obliged to pay social insurance contributions from the day they acquire the status of a company shareholder until the day they lose this status.

It might seem that by allowing other shareholders to participate in the company by transferring them a small number of shares in the company’s share capital while maintaining the predominant capital involvement of the existing sole shareholder, the shareholder of a single-member limited liability company should have guaranteed the possibility of effective cost optimization related to paying social insurance contributions.

However, in reality, it has looked quite different until now.

The State Approach on the Subject

The Social Insurance Institution (ZUS), and later the courts, took a stance that seemed to go against the straightforward rules of the law. This was about cases where a shareholder in an LLC had such a big share that the other shareholders (usually just one) couldn’t really affect the company’s decisions. ZUS saw such a major shareholder as if they were running their own business alone.

In situations where LLCs had just two shareholders, ZUS began processes and made decisions that the shareholder with the dominant share should pay social insurance contributions. And not just for now, but going back several years, because in ZUS point of view, this person “owned almost all the company.” So, ZUS was treating these major shareholders as if they were the sole owner of their LLCs.

Example:

Mr. Jones and Mr. Black decided to form a limited liability company. Mr. Jones owned 90% of the shares and Mr. Black 10%. ZUS recognized Mr Jones as a major shareholder and decided he should be treated as a sole shareholder and as a result – be a subject of a mandatory social insurance.

The courts also started to see it this way, saying that an LLC could be considered a one-person show even if the major shareholder didn’t hold every single share. The Supreme Court made the first ruling like this on August 3, 2011. And mostly, this way of thinking stayed the same in the courts, with a few exceptions, all the way up to 2024.

What Changed in 2024?

The resolution of the Polish Supreme Court of February 21, 2024, presented a whole new approach.

The Supreme Court agreed with the interpretation of the regulations directly, stating that “a partner of a two-person limited liability company holding 99 percent of the shares is not subject to social insurance under Art. 6 section 1 point 5 in connection with Art. 8 section 6 point 4 of the social security system regulation.”

What Does This Mean for Entrepreneurs?

Polish law is not a law of precedents. The above-mentioned resolution of the Supreme Court is binding only in case no. III UZP 8/23.

However, for the first time in years, the Supreme Court changed its opinion on the issue of compulsory social insurance in a limited liability company with two shareholders.

Assuming that the position of the Supreme Court will be upheld in subsequent judgments, in each case when the partners of a limited liability company are at least two entities, including the majority shareholder who is a natural person, this partner will not be obliged to pay social security and health insurance contributions.

In many cases, such a partner, due to the overlapping of insurance titles (e.g. running a business), in practice was not obliged to pay social security contributions anyway. However, in the case of health insurance, there is no overlap between insurance titles, which meant that it was necessary to pay a health insurance premium for each insurance title separately (e.g. running a business and the status of a partner in a single-member limited liability company).

Nevertheless, it should be borne in mind that the position of ZUS in a limited liability company, despite the resolution adopted by the Supreme Court, will certainly not change quickly.

If you are the majority shareholder of a limited liability company and would like to verify your possibilities regarding social security and health insurance contributions in connection with the resolution of the Supreme Court, please contact us. We will check whether you have a chance for a more favorable settlement and determine the best course of action for you.

Corporate Income Tax (CIT) in Poland – A Practical Guide

Corporate Income Tax (CIT) is a fundamental aspect of Poland’s tax system, impacting businesses operating within its borders. With its complexities and nuances, understanding CIT in Poland is crucial for both domestic and international enterprises. This article aims to provide a helpful guide to CIT in Poland, shedding light on its key aspects, regulations, and implications.

Overview of CIT in Poland:

CIT in Poland is governed by the Corporate Income Tax Act of 1997, which underwent significant amendments over the years to align with changing economic landscapes and EU directives.

CIT main rates are:

19% of the tax base
9% of the tax base on revenues (income) other than capital gains for small taxpayers and startup companies.

Other rates:

5% on the income from the disposal of intellectual property rights
15% on the income from the benefits or property transferred or provided by a family foundation
10% on the minimum corporate income tax (the minimum tax was suspended in 2023 but applies in 2024)
25% on the income in the case of a family foundation conducting business activities beyond the scope included regulations
Lump sum tax on the income of capital companies (Estonian CIT)

10% of the tax base– in the case of a small taxpayer and a taxpayer, at which value average income no exceeds the maximum values revenues specific for a small taxpayer
20% of the tax base – in the case of a taxpayer other than indicated in point 1

Who is the subject of taxation?

CIT payers include not only legal persons such as companies, associations, foundations, but also organizational entities without legal personality – except civil partnerships, general partnerships, partnerships and limited partnerships.

What is the subject of taxation?

The subject of taxation is the income (the surplus of revenues over incurred costs) garnered by the company within a given tax year.

Income is inclusive of:

Proceeds from capital gains
Income derived from other sources.

Note: Some income of CIT taxpayers is exempt from tax, provided that it is transferred to the statutory activities of these entities.

A distinctive form of taxation entails a lump sum on the income of capital companies, akin to the Estonian CIT model. Here, the subject of taxation (income) pertains to net profit, earmarked by the company for specific purposes.

Revenue in CIT

Tax revenues in CIT include in particular received money, monetary values, exchange rate differences or the value of items, rights or other benefits received free of charge or partially in return.

Revenues related to business activities are considered revenues due, even if they have not yet been actually received, excluding the value of returned goods and discounts granted.

Revenue is generated on the date of delivery of the item, sale of property rights or provision of the service, including partial provision of the service, no later than the date of issuance of the invoice or settlement of the receivable.

Deductible costs in CIT

The deductible costs are costs incurred in order to obtain revenue or maintain or secure a source of revenue, with the exception of expenses at the will of the legislator that are not considered costs of obtaining revenue.

By this definition, we understand that a given expense may be considered a tax-deductible cost if it meets all the following conditions:

was actually incurred
it was incurred in order to generate revenue or maintain or secure a source of revenue
is not included in the catalog of expenses not considered as costs, listed in the CIT Act.

Including a given expense as a tax-deductible cost depends on its actual and final incurrence.

Incurring an expense should be understood as a burden on the taxpayer’s assets. This burden should also be of a final nature. Expenses incurred only temporarily by the taxpayer do not meet the criteria for being definitively incurred.

Depreciation

The deductible includes depreciation deductions.

Tax depreciation is performed by most taxpayers. The regulations exclude from the group of taxpayers only entities that meet all the following conditions:

the taxpayer was declared bankrupt,
the taxpayer does not run a business.

The depreciation write-offs are made on the initial value of the fixed asset (intangible asset). As a rule, the initial value is determined by one of the following parameters:

purchase price,
manufacturing cost,
market value,
valuation made by the taxpayer or value resulting from the books,
algorithm specified in the regulations regarding groups of assets taken over

Only acquired intangible assets are subject to depreciation, i.e. buildings, structures, machines, means of transport, investments in external fixed assets and property rights, such as: licenses, copyrights, industrial property rights and know-how, and development costs.

Monthly and Quarterly Advance Payments in CIT

Monthly CIT advances are due by the 20th day of each month for the preceding month, with the final advance payment for the tax year payable by the 20th day of the first month of the subsequent tax year.

If the taxpayers submit their tax return and pay tax before the deadline for paying the advance payment for the last month, they do not pay this advance payment.

CIT taxpayers may pay monthly advances in a simplified form, i.e. in the amount of 1/12 of the tax due, shown in the tax return submitted in the year preceding a given tax year.

Quarterly advance payments can be made by:

taxpayers who start their business – in the first tax year,
small taxpayers.

Taxpayers make quarterly advances by the 20th day of each month following the quarter for which the advance payment is made, and the advance payment for the last quarter of the tax year – by the 20th day of the first month of the following tax year.

Tax Preferences

Taxpayers who are, from the date of commencement of business activity to the first day of the month in the tax year in which they begin to benefit from the exemption, small entrepreneurs within the meaning of the provisions on business activity, may benefit from tax preferences.

The preference involves postponing the obligation to pay income tax advances, while spreading these payments into 5 interest-free installments.

Annual CIT Settlement

Taxpayers must submit an annual return on income (or loss) for a given tax year by the end of the third month of the subsequent year, with tax payment due by the same deadline. Additionally, a financial report must be furnished to the National Court Register within 6 months of the new financial year.

Tax Year in CIT

The tax year in CIT typically aligns with the calendar year; however, alternative tax years may be stipulated in the company agreement, statute, or other regulatory documents.

Alternative Settlement Method – Estonian CIT

Corporate income taxpayers qualifying under specific Act conditions may opt for Estonian tax settlement rules, which negate the necessity for tax accounting, determining tax-deductible costs, or computing tax depreciation deductions. CIT advances are deferred, with tax payable upon profit distribution (dividends).

Conclusion

Understanding the rules of CIT in Poland is essential for businesses. The tax is paid by both small companies with a few employees and banks employing several thousand people. The scale of the action requires consideration when it comes to consequences, especially in the case of the latter organizations. CIT returns are handled from the very beginning by specialists, and often even by a whole team of accountants. Adwisen offers you qualified and helpful assistance throughout the whole process.

Financial Statements in Poland – A Practical Guide

Financial statements are crucial documents that provide a snapshot of a company’s financial health and performance. In Poland, as in many other countries, businesses are required to prepare and disclose financial statements to comply with legal and regulatory requirements. In this article, we’ll explore the basics of financial statements in Poland, including their purpose, components, and regulatory framework.

What Is a Financial Statement?

A financial statement is a document containing basic information about the company’s annual activities, presented in financial terms. The date on which the financial statements are prepared is called the balance sheet date.

The financial statements should be prepared in Polish and in Polish currency.

What Should the Financial Report Consist Of?

balance sheet – the balance of assets and liabilities is shown as at the end of the current and previous financial year
profit and loss account – revenues, costs, profits and losses and mandatory charges to the financial result for the current and previous financial year are shown separately
additional information – which includes, among others, a description of the adopted accounting principles (policy), including the adopted valuation methods and changes compared to the previous year.

The financial statements must be accompanied by:

a resolution approving these documents
activity report (if required – applies to, among others, capital companies, limited joint-stock partnerships)
a resolution on the division of profit or coverage of loss
auditor’s opinion/report (if the financial statements were audited)

Who Prepares the Financial Statements?

The following persons are obliged to prepare financial statements:

companies that must keep accounting books in accordance with the Accounting Act, for example due to the amount of revenue or legal status
companies that voluntarily chose accounting books kept in accordance with the Accounting Act.

Preparation of the annual financial report is the responsibility of the unit’s managers, i.e.:

members of the management board of capital companies
partners managing the company’s affairs in a general partnership, civil partnership and partnership
general partners managing the company’s affairs in a limited partnership and a limited joint-stock partnership
liquidators, trustees or administrators in bankruptcy proceedings
members of management bodies of other entities (to which the provisions of the Accounting Act apply).

When to Prepare Financial Statements?

Companies registered in the National Court Register have 3 months to prepare financial statements from the balance sheet date. If the financial year coincides with the calendar year, the deadline for preparing the report is March 31.

Then, the report is approved by the relevant bodies in the company, e.g.: general meeting of shareholders, all partners. They are also approved by the owner of a sole proprietorship.

The annual financial report should be approved no later than 6 months from the balance sheet date, i.e. by June 30, if the financial year coincides with the calendar year.

If the company’s fiscal year coincides with the calendar year, the balance sheet date is December 31.

How to Prepare an E-financial Statement?

Financial statements can only be prepared in electronic form, in accordance with the structure and format detailed by the Ministry of Finance.

This requirement is effective from October 1, 2018.

From January 1, 2020, the obligation to create reports in a structured form also covers organizations not entered in the register of entrepreneurs of the National Court Register, which are CIT taxpayers, e.g. foundations, associations, trade unions.

How to Sign an E-financial Report?

The financial report in electronic form is signed by:

unit manager and
a person entrusted with keeping accounting books (e.g. chief accountant).

If the entity is managed by a multi-person body, the financial report may be signed by at least one person being a member of this body. However, before that, other persons who are members of this body must submit declarations that the financial statements meet the requirements provided for in the Act or refuse to submit such declarations.

Sanctions for Failure to Submit a Report

Failure to submit financial statements may result in, among others:

fine imposed on the unit’s manager (e.g. member of the management board) from 10 to 720 daily rates
penalty of restriction of liberty of the entity’s manager (e.g. member of the management board) from one month to 2 years
coercive proceedings
dissolution of the company and removal from the National Court Register
appointing a curator.

Companies that do not submit a report are requested by the National Court Register to submit it within 7 days of receiving the notification under the threat of penalty or dissolution of the company (this is the so-called compulsory procedure).

Declaration of No Obligation to Submit an Annual Report

General partnerships or professional partnerships do not have to prepare financial statements if their revenues are less than the equivalent of EUR 2 million.

They then submit to the relevant National Court Register a declaration of no obligation to prepare and submit an annual financial report. They have 6 months to do so from the end of the financial year.

Companies in Poland are generally required to prepare their financial statements annually, following the end of the fiscal year. Publicly traded companies and certain other entities may also be subject to additional reporting requirements imposed by regulatory bodies such as the Polish Financial Supervision Authority (KNF).

Conclusion:

Financial reports require precision and compliance with regulations. Seeking professional advice from accountants or legal experts familiar with Polish accounting standards can further assist businesses in navigating the complexities of financial reporting in Poland. Adwisen offers you qualified and helpful assistance with your financial statements.

Unveiling the Schengen Zone: A New Chapter for Romania and Bulgaria

Introduction

The European Union Member States of Romania and Bulgaria are joining the open-border agreement based on the 1990 Schengen Treaty. The enlargement marks the progress of these two states in the sectors of air borders, visas, police cooperation, and personal data protection and the further unification of the EU.

What is the Schengen Zone?

The Schengen Zone represents one of the European Union’s crowning achievements, enabling passport-free movement across member states. Established in 1985, it has grown from a five-country agreement to a vast area allowing almost 420 million people to travel, work, and live freely across 27 countries. Schengen membership is a symbol of unity, cooperation, and freedom, embodying Europe’s commitment to open borders and the seamless integration of its citizens.

Schengen Members

The Schengen area consists of the newly joining Romania and Bulgaria, Poland, Netherlands, Greece, France, Lithuania, Slovenia, Finland, Switzerland, Norway, Croatia, Monaco, Germany, Hungary, Italy, Malta, Sweden, Iceland, Spain, Portugal, Liechtenstein, Belgium, Latvia, Slovakia, Estonia, Czech Republic, Austria, Luxembourg, Denmark, Cyprus, and the micro-states of Vatican, San Marino and Andorra being de facto members, as well as Antigua and Barbuda, and São Tomé and Príncipe.

Romania and Bulgaria’s Historical Joining

The recent unanimous decision by the Council to welcome Romania and Bulgaria into the Schengen Zone marks a historic moment for both nations and the EU at large. Starting on 31 March 2024, air and sea border controls will be lifted, facilitating easier travel, boosting trade, and promoting tourism.

However, border checks will continue to apply for any land-based travel between either Bulgaria or Romania and other Schengen Area countries. The European Council will continue talks in 2024 to lift such land border checks.

This inclusion is the result of years of diligent preparation by Romania and Bulgaria, demonstrating their commitment to meeting Schengen’s strict requirements through significant improvements in border management and cooperation with neighboring countries.

Envisioning the Future of European Integration

The accession of Romania and Bulgaria to the Schengen Zone not only expands the area’s geographical footprint but also strengthens the fabric of the EU. It signals a renewed commitment to the principle of free movement, potentially setting a precedent for future expansions.

As the Schengen Zone grows, it enhances the EU’s internal cohesion and global standing, paving the way for a more integrated, secure, and prosperous Europe. This expansion could inspire further enlargements, reinforcing the vision of a united Europe without internal borders, where every member state shares in the benefits of closer integration and cooperation.

References:

https://commission.europa.eu/news/eu-will-lift-checks-air-and-sea-borders-bulgaria-and-romania-march-2024-01-08_en

Schengen acquis – Agreement between the Governments of the States of the Benelux Economic Union, Germany and France on the gradual abolition of checks at their common borders – EU monitor

Top 5 Business Opportunities in Poland for 2024

You want to start a business in Poland, but you don’t know what business opportunities wait for you here and which are the most promising? This is a short guide to help you find the best business branch in Poland for 2024.

In the dynamic economic landscape of Poland, the year 2024 unveils a spectrum of promising business opportunities for the aspiring entrepreneurs. In this comprehensive overview, we delve into five key areas anticipated to witness significant growth, offering insights for discerning individuals eager to tap into the evolving trends within the Polish market.

From the dynamic landscape of IT services to the culinary finesse of restaurant businesses, each sector presents distinctive opportunities reflective of Poland’s economic resilience and progressive ethos.

So, let’s dive into the top five business opportunities in Poland for 2024, uncovering the pathways to prosperity.

1. IT Services: The Tech Renaissance

Poland’s Information Technology sector has been a focal point of its economic evolution, and 2024 is no exception. The demand for IT services is expected to surge, providing an optimal environment for entrepreneurs interested in software development, cybersecurity solutions, and digital transformation consultancy. As Poland embraces digital innovation, the IT sector emerges as a crucible for transformative ventures.

2. Consulting Services: Strategic Prowess in Demand

Navigating the complexities of contemporary business landscapes necessitates strategic acumen, fueling the demand for consulting services. Entrepreneurs adept at offering insights into business strategy, financial planning, and market analysis will find ample opportunities to contribute to the success of enterprises navigating the intricacies of the corporate environment.

3. Finance and insurance: Navigating the Financial Landscape

As economic activities surge, the demand for financial and insurance services is on the rise. Entrepreneurs in the finance sector can explore opportunities in wealth management, financial consulting, and innovative insurance solutions. Safeguarding financial futures in a thriving market like Poland is a venture ripe with potential.

4. E-commerce Business: Redefining Retail Dynamics

The omnipresence of e-commerce continues to reshape consumer behaviors, and Poland stands as a testament to this global phenomenon. Entrepreneurs venturing into the online retail sphere, whether through the establishment of e-commerce platforms or specialized services like logistics and digital marketing, are poised to tap into a burgeoning market. With a tech-savvy population, the e-commerce sector in Poland presents a wide variety of opportunities for digital entrepreneurs.

5. Restaurant Business: Gastronomic Innovation

Poland’s gastronomic realm is experiencing a renaissance, driven by evolving culinary preferences and a discerning consumer base. In 2024, the restaurant business extends beyond mere sustenance, focusing on immersive dining experiences, diverse cuisines, and sustainable practices. Entrepreneurs with a passion for culinary innovation can carve a niche in this dynamic and experiential industry.

Conclusions:

In the landscape of Poland’s burgeoning opportunities for 2024, these five sectors stand as pillars of potential. Whether you’re delving into the digital realms of IT, providing strategic guidance through consulting services, creating culinary experiences, navigating the e-commerce wave, or safeguarding financial futures, Poland’s business canvas is yours to paint. Stay tuned as we delve deeper into each opportunity, providing actionable insights to catalyze your entrepreneurial journey in this dynamic market. Adwisen offers you qualified and helpful assistance in starting a business in any of these sectors.

Reference:

Business tendency survey in manufacturing, construction, trade and service 2000-2024 (January 2024)

Record growth in the value of business services provided in Poland

The IT/ICT Sector in Poland – report 2023