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22 January 2021

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Poland Sets 2021 Thresholds for Reduced Tax Rate, Simplified VAT, Investment Incentive, Simplified Flat-Rate Tax, and Social Security Contribution Cap

Poland has set the thresholds for certain regimes for small taxpayers, including the reduced corporate tax rate, simplified VAT regime, investment incentive deduction, and simplified flat-rate tax as follows:

  • The revenue threshold for treatment as a small taxpayer and eligible for the reduced corporate tax rate (9%) for 2021 is PLN 9.031 million, inclusive of VAT, in 2020;
  • The supply threshold for the simplified VAT regime for small taxpayers is PLN 5.418 million for 2021;
  • For small taxpayers and newly established businesses, the investment incentive deduction for fixed assets in asset groups 3 to 8 (except for passenger cars) is PLN 226,000 for 2021; and
  • The simplified flat-rate tax threshold for small businesses for 2021 is revenue of PLN 9.031 million in 2020 - Businesses not exceeding that revenue amount (and startups) have the option to apply a flat tax rate of 20.0%, 17.0%, 12.5%, 8.5%, 5.5%, or 3.0% to business income depending on the activity type.

The thresholds for the reduced corporate tax rate, the simplified VAT regime, the investment incentive deduction, and the simplified flat-rate tax are PLN equivalents of EUR 2.0 million, EUR 1.2 million, EUR 50,000, and EUR 2.0 million, respectively, as determined by an exchange rate specified by Poland's National Bank. Note that prior to 2021, the threshold for the simplified flat-rate tax was the PLN equivalent of EUR 250,000.

Poland has also set the social security basis cap for 2021, which is increased from PLN 156,810 to PLN 157,770 with effect from 1 January 2021. The basis cap applies for pension and disability fund contributions by both employers and employees.

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