Scope of application
The Polish minimum corporate income tax (CIT) applies to entities with Polish tax residency and domestic tax capital groups (TCGs) that, during a given tax year:
Incurred a loss from sources of income other than capital gains; or
Achieved a profitability ratio of 2% or less from sources of income other than capital gains.
The relevant legislation prescribes rules for calculating a loss for minimum CIT purposes, meaning an accounting loss does not necessarily trigger minimum taxation. The tax base calculation excludes several factors, including:
Tax depreciation costs;
Leasing costs; and
20% of employment costs.
These adjustments may result in increased taxable income, potentially bringing the taxpayer's profitability established for minimum tax above the 2% threshold, thereby rendering the minimum tax inapplicable.
Payment deadlines
The minimum CIT is a one-time annual duty, with no requirement for advance payments throughout the tax year, with the following deadlines:
For taxpayers with a calendar-year tax period, the payment of the 2024 minimum CIT is due by March 31 2025; and
For taxpayers operating on a non-calendar tax year, the minimum tax must be paid by the end of the third month following the end of the tax year that commenced after January 1 2024.
Exemptions from the minimum CIT
There are statutory exemptions from minimum CIT. For instance, newly formed TCGs, recognised as distinct taxpayers, are exempt from minimum CIT obligations for three tax years: the year of establishment and the two subsequent years.
Additional minimum taxes
It is important to note that the Polish minimum CIT is not the only minimum tax relevant to enterprises, as there are, and will be, other ‘minimum’ taxes:
A minimum income tax on buildings, which has been in effect for several years;
Beginning January 2025, a global minimum tax that sets out top-ups to 15% will be implemented, with the option to also pay it in Poland for 2024; and
The tax on shifted profits, binding from 2022 and due on some payments to jurisdictions with lower tax rates.
Key considerations about the Polish minimum CIT
Given the upcoming deadlines for the minimum CIT payment, taxpayers are urged to assess their tax results promptly to determine applicability under the minimum income tax regime. This tax applies not only to entities reporting losses but also to those with special tax profitability below 2%.
