What is CIT?

CIT (Corporate Income Tax, Polish: podatek dochodowy od osob prawnych) is the income tax levied on profits earned by companies, foundations, associations, and other entities with legal personality in Poland. It is the corporate counterpart to PIT, which applies to individuals.

The legal basis is the Act of 15 February 1992 on Corporate Income Tax. CIT is one of Poland's key sources of budget revenue.

Who Pays CIT?

CIT taxpayers include:

  • Capital companies -- limited liability companies (sp. z o.o.), joint-stock companies (S.A.), and simple joint-stock companies (P.S.A.).
  • Limited partnerships and limited joint-stock partnerships -- subject to CIT since 2021.
  • Tax capital groups -- groups of at least two related companies meeting statutory requirements.
  • Cooperatives, foundations, and associations -- to the extent of their economic activity.
  • Organizational units without legal personality -- with exceptions provided by law.
  • Controlled foreign companies (CFC) -- in specified situations.

Not CIT taxpayers: civil law partnerships, general partnerships, and professional partnerships. In these cases, the partners themselves are taxed under PIT or CIT depending on their legal status. An exception applies to general partnerships whose partners include legal persons and that have not filed the required partner information.

CIT Rates

Standard Rate: 19%

The default CIT rate is 19%, applicable to all taxpayers who do not qualify for the preferential rate.

Preferential Rate: 9%

The 9% rate is available to taxpayers meeting both of the following conditions:

  1. Small taxpayer status -- gross sales revenue (including VAT) in the previous tax year did not exceed the equivalent of 2 million EUR, OR the entity started operations in the current tax year.
  2. Current year revenue limit -- revenue earned in the current tax year does not exceed the equivalent of 2 million EUR.

The 9% rate does not apply to income from capital gains (e.g., dividends, sale of shares).

To check whether your company qualifies for the preferential CIT rate, use the calculators at kalkulatory.lintax.pl.

Tax Base

The CIT tax base is income -- the difference between revenues and tax-deductible costs, adjusted for any deductions. Revenues and costs are generally recognized on an accrual basis (when the obligation arises, not when payment is made).

Two Sources of Revenue

Since 2018, the law distinguishes two revenue sources:

  • Capital gains -- dividends, profit shares, sale of shares/stock, intangible assets.
  • Other business activity -- operating revenues from core business operations.

A loss from one source cannot offset income from the other. Tax losses may be deducted from income of the same source over 5 consecutive years, with a single-year deduction capped at 50% of the loss amount (or 5 million PLN).

Estonian CIT (Lump-Sum Tax on Company Income)

How Does Estonian CIT Work?

Estonian CIT is an alternative taxation model where the company does not pay tax on current income. Taxation occurs only when profits are distributed to shareholders (dividend payments). This means retained and reinvested profits are not subject to income tax.

Who Can Choose Estonian CIT?

Estonian CIT is available to limited liability companies, joint-stock companies, simple joint-stock companies, limited partnerships, and limited joint-stock partnerships that meet all of the following conditions:

  • shareholders are exclusively natural persons,
  • the company does not hold shares in other entities,
  • the company employs at least 3 employees (who are not shareholders),
  • passive income (interest, royalties, receivables) does not exceed 50% of total revenue,
  • the company prepares financial statements in accordance with the Accounting Act.

Estonian CIT Rates

| Taxpayer | Rate | |---|---| | Small taxpayer / starting business | 10% | | Other taxpayers | 20% |

After applying the mechanism of deducting CIT from the PIT dividend tax, the effective combined tax burden can be approximately 20% for small taxpayers and about 25% for others.

CIT-8 Return and Deadlines

Filing Deadline

The annual CIT-8 return must be filed by the end of the third month after the tax year ends. For taxpayers whose tax year coincides with the calendar year, the deadline falls on March 31.

CIT Advances

CIT taxpayers make monthly or quarterly advance payments (small taxpayers and startups) by the 20th day of the month following the settlement period.

Simplified advances -- equal to 1/12 of the tax due for the previous year -- may be used by taxpayers who reported tax due in the return for the year preceding the current year or the year before that.

Reporting Obligations

CIT taxpayers are required to:

  • maintain full bookkeeping (accounting books),
  • prepare annual financial statements,
  • file the CIT-8 return with appendices,
  • submit JPK files -- in particular JPK_V7M or JPK_V7K (if they are VAT taxpayers),
  • provide transfer pricing information (TPR) -- for transactions with related entities exceeding statutory thresholds.

Exemptions and Preferences

Entity Exemptions

The following are exempt from CIT:

  • the State Treasury,
  • the National Bank of Poland,
  • local government units (in a defined scope),
  • public benefit organizations (for statutory activities),
  • investment funds.

Tax Reliefs

Key reliefs available to CIT taxpayers:

  • R&D relief -- additional deduction of qualified costs for research and development activities (up to 200% of qualified costs for R&D centers).
  • IP Box -- a preferential 5% rate for income from qualified intellectual property rights.
  • Robotization relief -- deduction of 50% of the cost of acquiring industrial robots.
  • Expansion relief -- deduction of costs incurred to increase revenue from product sales.

Minimum Income Tax

Since 2024, a minimum income tax of 10% of the tax base applies to taxpayers who report an operating loss or whose share of income in revenue does not exceed 2%. Numerous exclusions exist, including for small taxpayers, entities in their first three years of operation, and those experiencing a revenue decline of at least 30%.

Common CIT Mistakes

  1. Incorrect revenue source classification -- improperly assigning revenue to capital gains vs. operating activities.
  2. Late advance payments -- generating penalty interest.
  3. Missing transfer pricing documentation -- for related-party transactions, which may result in income estimation by tax authorities.
  4. Ignoring cost limitations -- such as the 75% cap on debt financing costs or limits on intangible service costs from related entities.

Summary

CIT is the primary tax on companies and other legal persons conducting business in Poland. The tax system offers both a preferential 9% rate for smaller entities and innovative solutions such as Estonian CIT, which can significantly improve cash flow for companies that reinvest their profits. Proper CIT compliance requires careful bookkeeping and knowledge of numerous special regulations, making it advisable to entrust these obligations to a professional accounting firm.