|
Entities covered
The CIT applies to corporate entities such as companies as well as to companies being set up which are waiting to be registered as corporate entities. Furthermore, it also applies to “organised entities” with no corporate status with the exception of partnerships. Finally, foreign entities with no corporate status, if taxed in Poland for any reason, are subject to CIT provided that they are taxed in their home countries as corporate entities.
Taxation of residents
Polish CIT residents are subject to tax on their world-wide income. A company has a resident status if it is registered in Poland, or its management is located in Poland. Therefore Polish subsidiaries of foreign companies are regarded as residents and taxed based on general rules.
Taxation of non-residents
A non-resident company is subject to CIT exclusively on income generated in Poland. Furthermore, double tax treaties concluded by Poland provides for further limitations related to taxation of non residents. Under these treaties, Poland can tax a non-resident’s business profits only to such extent that these profits are attributable to the non-resident’s “permanent establishment” located in Poland. A permanent establishment is defined as a fixed place of business and the most typical example of such establishment is a branch office.
It should be noted that Poland has concluded double tax treaties with more than 80 countries including nearly all the developed ones. Therefore, non-resident businesses, if dealing in Poland, are nearly always covered by a tax treaty between Poland and their respective home countries.
Branch income
Apart from subsidiaries, a foreign company can establish a Polish branch. A branch office is allowed to run business activities exclusively within the scope of activity of its foreign owner.
A branch office nearly always has permanent establishment (PE) status in Poland. Once a branch is established, the foreign company pays corporate income tax at the standard rate of 19% on the basis of income attributable to the operations of the Polish branch. For this purpose, as well as for accounting purposes, a branch is obliged to keep accounting books that should include all the data necessary to establish the taxable base. In those few cases in which a branch can demonstrate, on the basis of a Double Tax Treaty, that its business presence in Poland does not amount to a permanent establishment, its profits are not subject to Polish corporate income tax.
|
|
