CM October 2020

COUNTRY FOCUS
AUTHOR – Adam Bernstein
workers must inform workers of their
right to form a worker’s council which
must be consulted on key business
matters.
Discrimination is banned on a
similar basis to the UK. However,
sexual harassment is covered under
discrimination law. The compensation
that can be awarded starts at a minimum
of the statutory minimum wage (PLN
2600).
Maternity leave varies according to
the number of children a woman bears –
from 20 weeks for one child to 37 weeks
if five or more are born. Paternity leave
is set at two weeks until the child is two
years old.
Poland has its own version of the
transfer of undertakings legislation and
so employees transfer on a business sale;
they cannot be dismissed as a result of
the sale. That said, an employer can
terminate for another reason and then
attempt to re-employ on new terms.
Termination notice varies according
to length of service – two weeks for less
than six months service; one month for
six months or more of service; three
months for three or more years of service.
TAXATION CHALLENGES
Corporate Income Tax (CIT) applies to
limited liability companies and joint
stock companies at a rate of 19 percent.
However, a lower rate of nine percent
applies to non-capital revenues and
revenues generated in the tax year below
the Polish equivalent of €2m. For limited
partnerships, Personal Income Tax (PIT),
not CIT, applies.
The Polish VAT is harmonised with
that of the EU. Nevertheless, there are
four tax rates – a basic 23 percent for
the majority of goods and services;
eight percent for specific goods and
services (such as goods related to health
protection, groceries and hotel services);
five percent for some farm produce;
and zero for (in the main) export and
intra-Community supply of goods and
international transport services.
But as with the UK, Polish VAT is
not simple and there is an exemption:
‘Small entrepreneurs’ are exempted if
ex-VAT sales do not exceed PLN 200,000
in the previous tax year – pro rata if they
start business part way through the tax
year. Exemptions do not apply to goods
made of precious metals, goods subject
to excise tax (except for electricity,
tobacco products and passenger cars),
construction sites, new means of
transport, legal or consultancy services.
Every natural person must pay PIT.
However, the Polish system allows some
taxpayers to choose how. Under general
rules, income is taxed at 17 percent and
32 percent above incomes of PLN 85,528;
there’s the option of a flat rate of 19
percent for those running businesses as
a sole trader or partnership; a lump sum
(depending on activity); or via tax card
from the tax office. Dividends are taxed
at 19 percent.
There are three notable tax reliefs
for individuals – Innovation Box which
uses a 5 percent rate on income derived
from intellectual property rights related
to taxpayer activity; R&D relief which
allows the deduction of eligible costs;
and an exemption for those under 26
years from paying tax on income below
PLN 85,528.
IN SUMMARY
Poland is a great place to do business,
but language difficulties may need
overcoming. The gov.pl website – search
for ‘Entrepreneur’s Matters’ – is helpful in
signposting the way on most regulatory
matters, but users will come across
‘English’ webpages that are written in
Polish; a good translator is, in other
words, almost essential.
Adam Bernstein is a freelance
business writer.
Poland is bordered by the
Baltic Sea, Lithuania, and
Russia's Kaliningrad Oblast to
the north, Belarus and Ukraine
to the east, Slovakia and the
Czech Republic to the south, and
Germany to the west.
Advancing the credit profession / www.cicm.com / October 2020 / PAGE 27