POLAND’S INVESTMENT ATTRACTIVENESS IN TERMS OF TAXATION
Poland has for years enjoyed growing interest from foreign investors, attracting substantial capital thanks to its strategic location, rapidly developing economy, and friendly business environment. In the prestigious FDI Confidence Index compiled in January 2024, Poland was impressively ranked the 23rd most attractive country for investors globally, and an outstanding 7th among emerging markets. One of the key factors driving this influx of foreign investment is Poland’s favorable tax conditions. In this article, we delve into the main tax aspects that make Poland an attractive place to invest.
At the outset, it should be noted that corporate income tax in Poland is relatively low compared to many Western European countries. The basic CIT rate stands at an attractive 19%, while a preferential rate of 9% is available for small taxpayers whose annual income does not exceed €2 million, and for new companies that are just starting out. On top of that, the innovative “Estonian CIT”, or flat-rate tax on corporate income, introduced in Poland, allows companies that meet the relevant conditions to defer income tax on profits that are reinvested in operations. Tax is only charged when profits are distributed, such as in the form of dividends. This allows companies to reinvest their profits without a current tax burden, which promotes long-term growth and increases their competitiveness in the market.
Poland also offers a wealth of tax reliefs and preferences that can significantly reduce the costs of doing business. The generous research and development (R&D) tax relief allows entrepreneurs to deduct R&D-related costs from their tax base. In some cases, up to 200% of these costs can be deducted, providing a powerful incentive to invest in innovation. Another compelling option is the IP Box, which allows you to tax income from intellectual property rights at a preferential rate of 5%. This promotes the development of technology and innovation, attracting investors from high value-added sectors.
Special Economic Zones and Polish Investment Zones offer extraordinary tax exemptions to investors. Companies investing in these zones can benefit from income tax exemptions for up to 15 years. These conditions favor both large companies and smaller investors, who can count on preferential treatment in exchange for creating new jobs and investing in the development of the region. Special Economic Zones and Polish Investment Zones thus become a key tool in the strategy of attracting foreign investment.
Poland also boasts an extensive network of double taxation treaties with many countries around the world. These agreements allow investors to avoid double taxation of their income, which enhances the predictability and stability of their investments. These agreements often also reduce withholding taxes on dividends, interest, or royalties, further decreasing the tax burden on foreign investors.
In conclusion, Poland is an attractive place to invest from the point of view of foreign investors, thanks to its favorable tax conditions, such as competitive CIT rates, Estonian CIT, special economic zones, tax reliefs, and a wide network of double taxation treaties. Legal stability and access to investment support programs further amplify Poland’s allure as a prime destination for investment capital. All of these factors together create an exceptionally favorable environment for foreign investors looking for stable and advantageous conditions to develop their business activities.
Dive into the promising opportunities that Poland offers and discover why this dynamic country is capturing the attention of investors worldwide.
