Who cannot benefit from the Zero tax on reinvested profits solution?


The Zero tax on reinvested profits solution cannot be used by, among others:

1) financial enterprises referred to in art. 15c(16) of the CIT Act, namely

  • national banks,
  • credit institutions,
  • co-operative savings and credit banks and the National Association of Cooperative Savings and Credit Unions,
  • investment companies,
  • associations,
  • managing an alternative investment company,
  • domestic insurance company and foreign insurance company,
  • domestic reinsurance company and foreign reinsurance company, voluntary fund,
  • open-ended fund,
  • employee fund,
  • central securities depository,

2) lending institutions

3) taxpayers earning income from economic activity conducted in the special economic zone on the basis of a permit, or earned from economic activity specified in the decision on support. (This means that taxpayers currently earning income that is exempt under a decision on aid or SEZ authorisation are excluded from the possibility of flat taxation. Once the limit has been exhausted or the decision (authorisation) has been revoked or expired, a taxpayer who meets the conditions set out in the flat rate legislation may opt for this form of taxation).

4) taxpayers in bankruptcy or liquidation.

5) Entities involved in demergers, mergers and non-monetary contributions in the form of an undertaking or an organised part thereof.


(The exclusion of the last category of entities is temporary. A taxpayer participating in a restructuring may elect to be taxed under the Zero tax on reinvested profits solution at the earliest in the 3rd tax year after the commencement of operations as a result of the occurrence of a merger, demerger or contribution/receipt) of an in kind contribution, but not earlier than 24 months after the date of incorporation).



In the case of mergers, demergers of entities or contributions in kind to a company, the aforementioned provisions shall also apply mutatis mutandis to entities acquiring or receiving contributions in kind.

With the proviso that this form of taxation may be chosen if:

  • A limited liability company is established by means of a business conversion, because the conversion of a sole proprietorship into a limited liability company is not a restructuring operation listed in art. 28k(1)(5) to (6), and therefore does not limit in any way the right to benefit from the flat rate – so in the “Guide to the flat rate taxation on company income”, issued by the Minister of Finance on 23 December 2021;
  • A company taxed with flat rate on corporate income will undergo a demerger by spinning off from it an organised part of the enterprise to another company, also taxed with flat rate, then both companies will retain the right to this form of taxation – this was recognised in a tax interpretation dated 4 August 2022, 0111-KDIB1-2.4010.281.2022.4.AW.