A company may choose to be taxed under the Zero tax on reinvested profits solution if the following conditions are met.
Revenues from: receivables, interest, loans, leasing fees, sureties, guarantees, copyrights, industrial property rights, sale of financial instruments and transactions with related parties do not exceed 50% of the company’s total revenues (the idea is that more than half of the company’s revenues should come from operating activities, i.e. activities directly related to the production of goods or provision of services).
A company wishing to opt for the flat rate form employs at least 3 persons under employment contracts for at least 300 days in a tax year (if the tax year is not a period of consecutive 12 calendar months – for at least 82% of days falling in the tax year), or employs on the basis of a contract other than an employment contract, whereby expenditure on remuneration for contracts other than employment contracts amounts to at least 3 times the average monthly remuneration in the enterprise sector, if the taxpayer is obliged to collect advance personal income tax and social security contributions in connection with the payment of such remuneration.
Note:
Taxpayers starting a business can benefit from concessions regarding the origin of income and employment. The revenue structure condition is deemed to be met in the first tax year of the Zero tax on reinvested profits solution. The employment condition does not apply to the year of commencement of business activity and to the 2 years immediately following. From the second fiscal year onwards, the company is required to increase its headcount by at least 1 full-time equivalent (FTE) each year until the regulatory headcount level is reached.
The shareholders, stockholders or partners of a company intending to choose the Zero tax on reinvested profits solution are exclusively natural persons.
The company does not hold shares in the capital of another company, titles of participation in an investment fund or in a joint investment institution, all rights and obligations in a company that is not a legal person (however, there is no obstacle for a shareholder to hold shares in multiple companies at the same time).
For the flat rate taxation period, the company does not prepare financial statements in accordance with International Accounting Standards.
The company files a notice of its choice of flat rate taxation with the competent head of the tax office by the end of the first month of the first tax year in which flat rate taxation is to be applied.
Note! All the above conditions must be jointly met.
The minimum employment level referred to above does not include the partners of that taxpayer. The conditions as to employment are deemed to be fulfilled if, in connection with the payment of remuneration, the taxpayer is obliged to collect advance payments for personal income tax and the contributions specified in the Act of 13 October 1998 on the social security system (art. 28j(1)(3) of the CIT Act). Expenses should be incurred in each month of the tax year.
According to the new regulations, the condition of minimum employment on a basis other than an employment contract is deemed to be met if the Zero tax on reinvested profits solution taxpayer in respect of at least one of the above-mentioned charges (PIT or ZUS) is the payer. In doing so, it is irrelevant whether the Zero tax on reinvested profits solution taxpayer, who is formally a PIT/ZUS payer, has actually collected these dues.
Compare: amended legislation from 1 January 2023.
According to the new regulations, the condition of minimum employment on a basis other than an employment contract is deemed to be met if the Zero tax on reinvested profits solution taxpayer in respect of at least one of the above-mentioned charges (PIT or ZUS) is the payer. In doing so, it is irrelevant whether the Zero tax on reinvested profits solution taxpayer, who is formally a PIT/ZUS payer, has actually collected these dues.