The Polish tax system is often described as complicated and unfavourable for entrepreneurs. However, this is a far-reaching simplification. Our legislator introduces many reliefs and preferences available to companies operating in the IT sector. Why is it worth running an IT company in Poland?
Advantages of running a limited liability company in Poland
When looking for a favourable start-up solution for a business in the IT sector, it is worth paying attention to a limited liability company. It can be established relatively easily (including even via the Internet) and at a low cost – the minimum share capital is only PLN 5,000. What is more, the separate subjectivity and legal personality means that the partners are not liable for the obligations of the legal entity. It is liable with its own assets, while creditors have the possibility to file a claim against the members of the management board in the event of insolvency of the limited liability company.
Check: Limited liability company as a foreigner in Poland
Small taxpayer status for limited liability companies
Many limited liability companies will also be able to benefit from CIT small taxpayer status. This defines a taxpayer whose sales revenue in the previous tax year did not exceed the equivalent of EUR 2 million, i.e. more than PLN 8.5 million in 2024. The main benefit of small taxpayer status is the right to apply a lower CIT rate – 9% instead of the base 19%.
Lump sum on corporate income, or Estonian CIT
The choice of a limited liability company as the organisational and legal form for a software house also entails the right to Estonian CIT as a form of accounting with the tax authorities. This is an attractive form of tax optimisation for companies that invest heavily in development, as Estonian CIT allows the tax liability to be postponed until the distribution of profits from the company. Until such time as these profits are reinvested, e.g. in the purchase of new infrastructure or employee development, the company does not pay income tax. The advantages of
Estonian CIT include:
- no tax accounting;
- no need to determine tax deductible expenses;
- no need to calculate tax depreciation allowances.
It is worth remembering that it is possible to switch to Estonian CIT both by the end of the 1st month of the tax year in which the taxpayer wants to use Estonian CIT, and during the tax year (after accounting for CIT, closing the books and preparing the financial statements).
What is R&D relief?
R&D relief, i.e. for research and development, can be successfully implemented in companies involved in the IT industry. This is research or development work undertaken in a systematic manner in order to increase the stock of knowledge and its use for the creation of new applications, i.e. the creation of new software, the development of existing infrastructure, as well as test work. The R&D relief allows qualified costs listed in the PIT and CIT acts to be deducted from the tax base. Eligible costs may include, among others, expenditure on:
- purchase of IT equipment;
- preparation of expert opinions or opinions by a research unit;
- costs related to obtaining and maintaining IP protection, e.g. a trademark protection certificate or a patent.
The regulations allow 100% of eligible expenditure to be deducted, and in the case of a research and development centre, even 150% of the total amount.
IP Box relief for the IT sector
Software houses also have access to IP Box relief. It consists in the application of a 5 per cent PIT or CIT rate for taxation of income obtained from created or improved intellectual property rights classified as qualified IP. This includes, among others, a patent, a utility model or a copyright on a computer programme.
It is also worth mentioning that the current legislation allows the R&D relief and the IP BOX to be used in one tax year and for the same projects.
Lump sum for individual entrepreneurs
Not only limited liability companies can prove to be a good choice for IT entrepreneurs. Also freelancers have the possibility to choose an attractive form of taxation, i.e. a lump sum from registered income. Depending on the subject of the activity, the flat-rate taxation will be either 12% or 8.5%. It will not always be easy to determine which rate is appropriate; tax interpretations come to the rescue.
The development of an IT business in Poland may turn out to be the proverbial bull’s eye, provided the business is well planned. The choice of an appropriate legal form and favourable tax planning are very important elements of this plan. Linke Kulicki Law Firm has been supporting IT businesses for years. We assist with the establishment, development and ongoing legal support of the business. Our lawyers will create a company contract, advise on how to take advantage of tax benefits and how to settle accounts with the tax authorities in order to legally gain as much as possible. We invite both software houses that want to optimise their business and professionals who are just planning to enter the market to use our services.