All legal entities with revenues of up to the equivalent of EUR 2 million have a reason to be happy. From 2021, the content of certain acts has changed, thanks to which taxpayers can take advantage of the right to a 9% corporate income tax rate. Specifically: Art. 2 Section 14 of the draft law concerning Article. 19 of the CIT Act provides for the replacement of the phrase “EUR 1,200,000” with “EUR 2,000,000”. What is worth knowing about this topic? We explain.
Right to 9% corporate tax rate since 2021. – what changes are assumed?
In 2020, changes to the regulations included the so-called “Small CIT taxpayers” – the revenue limit for them has been increased from the equivalent of EUR 1,200,000 to EUR 2,000,000. From January 1, 2021, the changes affect more taxpayers, as more laws have been updated.
- The following have changed:
- Personal Income Tax Act;
- Corporate Income Tax Act;
- Act on flat-rate income tax on certain revenues earned by natural persons;
- Other Acts.
What does this mean in practice? To apply the preferential income tax rate, two conditions must be met:
Revenues in the current year may not exceed PLN 9,097,000;
Revenues in the previous tax year (i.e. in 2020) did not exceed PLN 9,031,000 gross (including VAT due).
The differences in the amounts result from the Euro exchange rate – it is converted accordingly:
In 2021 – the average exchange rate of the National Bank of Poland from January 4, 2021 (PLN 4.5485 / EUR 1);
In 2020 – the average exchange rate of the National Bank of Poland from October 1, 2020 (PLN 4.5153 / EUR 1).
Right to a 9% CIT rate from 2021 – what about taxpayers with a shifted tax year?
It happens that the taxpayer starts the tax year differently than the calendar year. Namely – it could have started before January 1, 2021 or will end after December 31, 2020. What then? If the income of such a taxpayer before December 31, 2020 did not exceed the equivalent of EUR 2,000,000, he may apply a preferential CIT rate of 9% until the end of the month in which their income will not exceed this amount. How do you convert 2,000,000 Euro into PLN in this case? Check the average exchange rate of the National Bank of Poland on the first day of the tax year for the taxpayer.
Right to a 9% CIT rate from 2021 – limited partnerships
Last year, the so-called “Small taxpayers” or taxpayers starting their business at that time could benefit from a preferential rate. Thanks to the amendment of November 9, 2018 amending certain acts, the provisions entered into force on January 1, 2020. The new regulations translate into the possibility of using a 9% income tax rate by limited partnerships that became (or will be – from May 1, 2021) ) corporate income tax payers. However, there is one condition that they must meet in order to be able to apply the 9% rate – their revenues in 2020 did not exceed PLN 9,031,000 gross.
Right to a 9% CIT rate from 2021 – who cannot take advantage of the preferential rates?
Unfortunately, not all taxpayers can breathe a sigh of relief – there are those who are excluded from the right to 9% of the CIT rate. Art. 18 and Art. 19 of the Amendment Act, the transitional regulations clearly indicate which CIT taxpayers are required to apply a higher (i.e. previous) revenue limit. Specifically: these are taxpayers who in the period from December 1, 2020 to December 31, 2020:
- They were established as a result of restructuring activities (indicated by the legislator) – that is through: transformation, merger or division (this does not apply to transformation of the company into another company) transformation of an entrepreneur who is a natural person or a company that is not a legal person or will contribute the equivalent of EUR 10,000 (45,000 PLN after conversion according to the exchange rate of the National Bank of Poland from October 1, 2020) towards the capital of the taxpayer of the enterprise / its organized part / components of its assets / assets obtained through liquidation proceedings of other taxpayers;
- They were subject to restructuring measures (indicated by the legislator), that is: they made a division, brought their enterprise / its organized part / assets of the enterprise / assets obtained through the liquidation proceedings of other taxpayers (in whom they had shares), as a contribution to another entity – with a value of in excess of PLN 45,000.
The number of taxpayers who, from January 1, can enjoy a higher income limit in order to benefit from the preferential 9% CIT rate, has significantly increased. In some cases, taxpayers must meet certain conditions – which we have discussed in this article. If in doubt – we recommend contacting us, we have the taxes at our fingertips.