Tax reliefs in Poland that every entrepreneur should know about

Poland offers various tax reliefs to individuals based on several criteria such as their profession, age, and social groups. These tax breaks are designed to support and encourage entrepreneurship. As an entrepreneur, it’s essential to understand these benefits and utilize them to your advantage.

ARPI experts have prepared a concise summary of the most popular tax benefits for your convenience.

1. Research and development (R&D)

Poland provides tax reliefs to companies for their research and development (R&D) expenses related to innovation, technology, and product development, resulting in significant cost savings. Only certain costs are eligible for this relief, such as business income tax on the tax scale or the so-called flat tax when conducting R&D activities. The relief is deductible up to the amount of income earned from non-agricultural business activities.

Value of allowance: 100%-150% of the costs incurred for individual expenses eligible for the relief.

2. CSR sponsorship tax reliefs

To receive sponsorship relief for cultural, social, sports, or other purposes, one needs to donate funds, goods, or services. However, you need to provide proper documentation to prove that the expenses were incurred in connection with the acquisition of the terminal or the handling of transactions using it.

Value of allowance: Deduction of 50% of deductible expenses from the tax base.

3. IP Box tax reliefs

The IP Box relief, a tax preference, was implemented on October 23, 2018, effective January 1, 2019. Poland’s IP Box system allows companies that own patents, copyrights, or trademarks to benefit from reduced tax rates on income generated from these assets. The prerequisite is that qualified IP (qualified intellectual property right) is generated in the course of research and development activities and that qualified IP income is generated from it.

Value of allowance: preferential taxation of 5% PIT and CIT (replacing CIT and PIT rates applied on a general basis or flat PIT).

4. Pro-family tax reliefs

The pro-family tax credit is the most commonly used tax deduction in the annual PIT return. In your 2023 tax return, not only can you take advantage of this deduction on your tax return, but there is also an option to return the unused deduction when the taxpayer’s small income prevented you from taking full advantage of this tax reliefs. To take advantage of the family (child) tax credit, be sure to provide as part of the application a copy of the birth certificate, a certificate of school attendance, and confirmation of being the guardian of the child for whom the credit is claimed.

According to the provision, the relief can be used by taxpayers who in a given tax year earned income taxed on a general basis, using the tax scale (12% and 32%), and make a settlement on PIT-36 and PIT-37 forms.

Value of allowance: PLN 1,112.04 per year for the 1st child, PLN 1,112.04 per year for the 2nd child, PLN 2,000.04 for the 3rd child, PLN 2,700.00 for the 4th and each subsequent child.

5. Tax relief for return

Dedicated to those returning from abroad after not living in Poland for three years, this relief is designed to encourage Poles who have lived and worked outside Poland to settle back in the country. The mechanism of the relief is the ability to avoid declaring income covered by the relief for four years after returning to the country. Those who meet the criteria for the return relief can enjoy zero PIT for another 4 years after their return, which means exemption from taxation of income not exceeding the amount of PLN 85,528 in a given tax year.

Value of allowance: exemption from income tax on income, up to a maximum of PLN 85,528.

6. Internet allowance

Settled on an annual basis, the deduction allows a person to deduct the cost of using the Internet. A person who uses the deduction for the first time will be entitled to the deduction in the current year and in the immediately following year. There is an option to use the Internet without a deduction, and only after several years to start using the deduction. Each year, the taxpayer has the opportunity to use the deduction, the value of which does not exceed PLN 760 in a given tax year.

Value of allowance: a maximum of PLN 760 per year.

7. Relief for the young (under 26)

Zero PIT for the young is a personal income tax preference. The relief consists in the exemption from PIT of income from a job, assignment, graduate internship, or student internship earned by a taxpayer under the age of 26, up to the amount of PLN 85,528 in a tax year. The relief is automatic, no additional forms need to be filed.

Value of allowance: the relief covers income from contracts of employment, commission, and business activity up to a maximum of PLN 85,528.