Taxation for Ukrainians in Poland

Given the significant influx of Ukrainian citizens and entrepreneurs, understanding the peculiarities of the Polish tax system becomes particularly relevant. In this context, tax liabilities and benefits in Poland represent a key element of financial planning and management for Ukrainians residing or doing business in the country.

Main taxes for individuals and legal entities

In Poland, the main taxes for individuals and legal entities are income tax (PIT) and corporate income tax (CIT).

• For individuals (PIT). Tax rates depend on the level of income. Income up to 120,000 PLN is taxed at 12%, with a deduction that can reduce the tax. Income above this amount is taxed at 32%. There are also special rates for certain types of income, e.g. capital gains are taxed at 19%.
• For legal entities (CIT). The standard CIT rate is 19%. For small businesses whose annual turnover does not exceed the equivalent of €2 million, a preferential rate of 9% applies. This preferential rate does not apply to companies created by reorganization or merger and tax groups.

These tax rates and rules are key to understanding Poland's tax system, both for locals and foreigners doing business or working in the country.

VAT and specific taxes

In Poland, the basic VAT rate is 23%. There are also preferential rates of 8% and 5% applied to certain goods and services. For example, 8% VAT applies to certain foodstuffs, medical products, passenger transportation services and certain cultural events. The 5% rate applies in particular to basic foodstuffs, children's goods, and books and periodicals.

Specific taxes in Poland include excise taxes, property taxes and customs duties. Excise taxes are levied on alcohol, tobacco products, fuel and automobiles. For example, for cars with engines over 2000 cm³ the excise duty rate is 18.6%.

Mandatory separate payment mechanisms have also been introduced for certain types of goods and services, which is important for business transactions and requires opening a bank account in Poland for foreign companies carrying out transactions subject to VAT.

Registration and reporting

In Poland, company registration and record keeping require strict compliance with national laws and standards. Important steps include selecting the legal form of the company, preparing the necessary documentation and registering with the relevant state authorities.

• Choosing the legal form of the company. Various forms of business are available to foreign investors in Poland, including LLCs and joint stock companies. The choice of form depends on the size of the business, the amount of proposed investments and planned operations.
• Documentation for registration. It is necessary to prepare a set of documents, which may include the company's articles of association and documents confirming the contribution of authorized capital. All documents must be accurate and, if necessary, translated into Polish.
• Registration with the state authorities. The company must be registered with the National Court Register (KRS). This includes submitting the relevant forms and documents, which can be done through the online system or through a law firm.

Regarding accounting, companies in Poland must comply with Polish Accounting Standards (PAS) or International Financial Reporting Standards (IFRS), depending on their status. Reporting includes the preparation of financial statements at the end of the financial year, which must be approved and filed with the relevant registry within the prescribed deadlines.

Companies are required to keep records in Polish and in zloty and to ensure that accounting records are retained for at least five years. From 2024, Poland will also introduce a system of electronic invoices (KSeF), which will require companies to revise their accounting systems to integrate with this new system.

Benefits and subsidies for Ukrainian businessmen

In Poland, Ukrainian entrepreneurs can benefit from a number of financial incentives and subsidies designed to facilitate their business activities. One of the key benefits is the possibility to receive preferential social insurance rates from the Polish Social Insurance (ZUS) for the first two years of operation, which significantly reduces the financial burden on start-up entrepreneurs.

Additionally, within the framework of the European Erasmus Program for Young Entrepreneurs, Ukrainian businessmen can get the opportunity to study and work with experienced entrepreneurs in Europe. The program provides financial support covering travel and living expenses, which allows Ukrainian newcomers to gain the necessary experience and knowledge to develop their own business.

In addition, Poland plans to launch an investment fund that will finance the development of small and medium-sized Ukrainian and Polish companies in Ukraine. This fund will provide additional opportunities for investment insurance, which reduces risks and promotes sustainable business development of Ukrainian entrepreneurs in Poland and Ukraine.

Read also: Popular professions in Poland

Double taxation

The treaty between Ukraine and Poland on the prevention of double taxation allows Ukrainians working or doing business in Poland to avoid paying taxes on income in both countries. According to the treaty, taxes are paid in the country where the income was earned and then a tax credit can be applied in the taxpayer's country of residence.

Poland has signed double tax treaties with all EU countries, including Ukraine, which aim to eliminate international double taxation. This provides certainty to both Ukrainian and Polish entrepreneurs in conducting international trade and business, reducing legal risks and tax burden.

In order to clarify the taxpayer's status and determine tax liabilities, specific provisions of bilateral treaties should be taken into account and the Multilateral Convention should be used to implement measures aimed at preventing erosion of the tax base and removing profits from taxation (MLI Convention).