How to do Business Investors' Guide Poland - Polish Agency for ...

are entirely tax deductible, while representationcosts are not.Income (tax base) that is calculated in accordancewith tax provisions is subject to CIT ata rate of 19%, which ranks among the lowestin Europe.Revenues / deductible costs generated by apartnership are added to each partner’s revenues/ deductible costs in proportion to theirshares in the partnership; thus, the income isThe calendar year is generallythe tax year. Taxpayers may,however, select a different taxyear covering 12 consecutivecalendar months.effectively taxed at the level of each partner.Fixed assets and intangibles are subject todepreciation/amortization write-offs. Wheretheir value is not more than PLN 3,500, theycan be recognised as tax deductible in total inthe month in which they are brought intouse. Certain assets, such as land and works ofart, cannot be depreciated.A tax relief for the purchase of new technologiesenables the expenditures of enterpriseson new technologies to reduce their tax baseby 50%. The taxpayer may still depreciate thevalue of technologies purchased in full.Additionally, the minimum period for thedepreciation of costs of completed R&D workhas been reduced to 12 months.2.2.3.2. Taxation of dividendsDividends obtained by Foreign CompaniesRevenue (income) from distribution of profitsof a corporate entity with its registered officein Poland, including dividend income (as wellas the redemption of shares, liquidation proceeds,income / supplementary capital allocatedto share capital, etc.), is taxed at a rate of19%. This tax is withheld and remitted by thecompany paying the dividends. An exemptionfrom withholding tax on revenue (income)from profit sharing in a corporate entityearned by EU companies (or companies fromthe European Economic Area, “EEA“) applies.In order to benefit from the above exemption,the recipient of the dividend needs tosatisfy the following conditions:• it is subject to unlimited tax liability in anEU or EEA Member State (i.e. it is subject tocorporate income tax on its world-wideincome in an EU or EEA Member State);• it holds directly at least 10% (15% until theend of 2008) of the shares of a Polish companypaying dividends for an uninterruptedperiod of at least two years;• the Polish company paying dividendsreceives a certificate of tax residence fromthe recipient of the dividend.In addition, if the requirement to hold sharesin a Polish company for two years is notsatisfied at the time of the distribution of thedividend, the exemption is still available tothe recipient of the dividend. However, if theshares are alienated before the two-year periodelapses, the exemption expires and thecompany receiving the dividends is requiredto pay the dividend withholding tax accordingto the relevant Double Taxation Treaty (ifapplicable), together with penalty interest.These regulations only apply to companiesincorporated in EU or EEA Member Statesand since 1st July 2005 they also apply tocompanies registered in the SwissConfederation (the list of eligible companiesis provided in an appendix to the CorporateIncome Tax Act).The withholding tax rate on dividendspayable to foreign companies may be44