The minimum CIT tax will return. What is it and who does it apply to?  

Minimum tax to be paid in 2025

On 1 January 2024, the suspension of the minimum tax regulations will end. Pursuant to Art. 38ec of the CIT Act entities whose tax year coincides with the calendar year are exempt from the obligation to pay the minimum tax for the period from 1 January 2022 to 31 December 2023. However, in the case of entities whose tax year does not coincide with the calendar year, the minimum tax exemption is valid until the end of 2023. 

For the first time, the obligation to pay the minimum CIT tax will occur at the beginning of 2025.  

Minimum tax – what is it and who does it apply to? 

Minimum tax is a levy applicable to companies and tax capital groups that meet the criteria specified in the regulations. It was introduced in 2022 as part of the so-called Polish Order. However, the legislator suspended the application of the minimum tax provisions until the end of 2023.  

• from next year, the minimum tax will apply to companies with unlimited tax liability in Poland, including tax capital groups. The new tax may apply if the company incurred a loss in the tax year from sources of income other than capital gains or the share of income from sources other than capital gains in revenues other than capital gains was no more than 2%. The tax result indicated in the provisions on minimum CIT is calculated in a different way than the tax result determined for the purposes of "ordinary" annual CIT. For the purposes of determining the result in the minimum CIT, a separate calculation must be performed. 

Minimum tax – what entities are excluded from paying levy? 

The minimum tax applies to entities specified in the regulations. However, certain groups of taxpayers are excluded from the new obligation. Namely, the following will be exempt from the obligation to pay the minimum CIT tax:  

• financial companies, 
• entities starting a business, exemption for a period of up to 3 tax years from its commencement, 
• entities operating in the mineral extraction sector, in the medical sector or in international transport using ships or aircraft, provided that the majority of their revenues come from these activities, 
• the so-called small taxpayers, i.e., entities whose annual revenues do not exceed EUR 2 million, 
• entities that generated 30% less revenue in a given tax year compared to the previous year, 
• entities that achieved a share of income from a source of revenues other than capital gains in one of the three tax years immediately preceding the tax year for which the minimum income tax is paid, in the amount of at least 2%,
• entities whose shareholders or partners are exclusively natural persons and if the taxpayer does not own, directly or indirectly, more than 5%: 
  • shares in the capital of another company or all rights and obligations in a company that is not a legal person, 
  • other property rights related to the right to receive benefits as the founder or beneficiary of a foundation, trust or other entity or legal relationship of a fiduciary nature,
• municipal companies, taxpayers who are mining companies receiving public aid, taxpayers providing health care services and entities declared bankrupt, liquidated or subject to restructuring proceedings,
• taxpayers belonging to a group of at least two companies in which one company holds, during the entire tax year, directly or indirectly, at least 75% of the shares in other companies in this group, provided that the tax year of the group companies overlaps and the share of total income in the total revenues of these companies in a given tax year is greater than 2% - however, this group of taxpayers will be obliged to provide the tax office with information about companies included in the group that meet the above-mentioned conditions,
• taxpayers declared bankrupt, liquidated or subject to restructuring proceedings, 
• taxpayers who are parties to the cooperation agreement. 

Minimum CIT tax – how to calculate the tax base? 

In 2024, the minimum CIT will cover some business entities operating on the Polish market. It is therefore important to know today how much tax you will have to pay. 

It should be remembered that it is necessary to determine the tax base only if the profitability for the purposes of the minimum CIT does not exceed 2%. Only after determining the tax result within the meaning of the provisions on minimum corporate income tax and the company's profitability, it becomes necessary to calculate the tax base and the tax amount. The taxpayer will calculate the minimum tax amount by multiplying the tax base amount by 10%. 

The tax base is the sum of the following three components:  

• 1.5% of the company's revenues, excluding those from capital gains,
•  the amount of debt financing costs incurred for related entities exceeding 30% of profit before interest, taxes, depreciation and write-offs, i.e., tax EBITDA ("Earnings Before Interest, Taxes, Depreciation, and Amortization"),
• the amount of costs of services or intangible rights incurred for related entities exceeding PLN 3 million plus 5% of tax EBITDA.

Taxpayers can also choose a simplified method of determining the tax base. According to the simplified method, the taxable amount is the amount corresponding to 3% of the value of income from other sources - capital gains achieved by the taxpayer in the tax year. The taxpayer should inform the tax office about the choice of the simplified method in the tax return submitted for the tax year for which he made such a choice. 

The taxpayer may deduct the amount of the minimum tax paid for a given tax year from the income tax in subsequent years. The taxpayer is entitled to a deduction in the annual tax return only for the next 3 tax years immediately following the year for which the taxpayer paid the minimum income tax. 

When calculating the hypothetical amount of the minimum CIT tax, it should be taken into account that the situation of each taxpayer is different.  

Minimum tax – learn how we can help

We recommend using our professional tax advisory services. We will verify whether you are subject to the minimum corporate income tax regulations. We will help you determine the tax base and determine the amount of minimum tax to be paid. 

We will provide support in selecting optimal tax solutions and help in fulfilling administrative and reporting obligations arising from applicable regulations.

Learn about our service: Tax advisory in Poland