Overview of Capital Gains Tax in Poland
Capital gains tax in Poland is a crucial component of the country’s income tax system. It applies to both individuals and legal entities generating capital gain from various capital transactions, such as the sale of shares, Polish real estate, or other investment assets. Whether you are a Polish tax resident, a non-resident, or a foreign investor, understanding the rules, tax rates, and compliance requirements is key to remaining compliant with Polish tax law.
Certain rules and distinctions apply to capital gains, distinguishing them from income tax on trading activities.
Capital gains are generally taxed at a flat rate of 19%, though specific exemptions, conditions, and reporting rules may apply depending on the nature of the asset and the taxpayer’s status.
Personal income tax. Who Is Subject to Capital Gains Tax in Poland?
Tax Residents vs. Non-Residents
- Tax residents of Poland are subject to income tax on their worldwide income, including any capital gains.
- Non-residents are taxed only on income derived or gains arising from assets located in Poland or rights to such real estate.
A person is considered a Polish tax resident if they have their center of vital interests in Poland or stay in the country for more than 183 days in a tax year.
Types of Income Subject to Capital Gains Tax
Capital gains may arise from various sources, and Polish taxation distinguishes them accordingly:
1. Sale of Shares and Securities
Profits from the sale of shares, bonds, derivatives, or other financial instruments are subject to a flat 19% income tax. This includes gains derived from trading on the stock exchange or over-the-counter markets.
2. Dividend Income
Dividends received from Polish or foreign companies by Polish tax residents are also subject to a 19% withholding tax. For non-residents, withholding tax may be reduced under double taxation treaties, if applicable.
3. Interest Income
Interest income (e.g., from deposits, bonds, or loans) is subject to personal income tax at the flat rate of 19%. This applies to both residents and non-residents are subject only to income earned within Poland.
4. Polish Real Estate
Gains arising from the sale of real estate located in Poland are taxable, with special conditions if the property was owned for at least five years. If certain conditions are met, the income may be exempt.
Capital Gains Tax for Individuals
Personal Income Tax on Capital Gains
Personal income from capital gains is generally taxed at a flat rate of 19% in Poland. This applies to:
- Sale of shares, bonds, and other securities
- Dividend income
- Interest income
- Profit from the sale of real estate (if within 5 years of acquisition)
Exemptions and Deductions
Some exemptions apply, for example:
- No tax on real estate sold after five years from purchase.
- Certain derivative financial instruments held in structured accounts may be tax-free.
- Taxpayers may deduct costs incurred to generate the capital gain, such as brokerage fees, purchase costs, or improvement costs.
Filing and Payment
Taxpayers must file an annual tax return (PIT-38) and report income from capital by April 30th of the following year. The tax is levied on the net taxable income, calculated as revenue minus eligible costs.
Corporate Income Tax. Capital Gains Tax for Companies
When assigning revenues to the appropriate source, one should refer to the catalogue included in the Act. The legislator has created a list of benefits for which income must be included in the source of income from capital gains.
Within such a group, eight groups of revenues should be distinguished:
1) income from participation in the profits of legal persons, including m.in. dividends and balance sheet surpluses in cooperatives;
2) revenues obtained as a result of transformations, mergers or divisions of entities;
3) revenues obtained as a result of the liquidation of a company which is not a legal person, the withdrawal of a shareholder from such a company or the reduction of the capital share in such a company, if Poland loses the right to tax income from the sale of the assets received;
4) revenues from making an in-kind contribution to a legal person or a company being a CIT taxpayer;
5) income from shares in a legal person or a company that is a CIT taxpayer other than those indicated in the previous paragraphs;
6) revenues from the sale of all rights and obligations in a company which is not a legal person;
5) revenues from the sale of receivables previously acquired by the taxpayer and receivables resulting from revenues classified as capital gains;
6) income from property rights referred to in Article 16b(1)(4)-(7) of the CIT Act (i.e. copyrights or related economic rights, licenses, rights specified in the Act of 30.06.2000 – Industrial Property Law, from information related to industrial, commercial, scientific or organizational knowledge (know-how)), from securities and derivative financial instruments, excluding instruments used to hedge cash flows or revenues or costs not classified as capital gains, and from participation in investment funds or collective investment institutions, including from their rental, lease or other agreement of a similar nature, as well as revenues from their sale.
It should be noted that the above list is general in nature, because the provisions of the CIT Act provide a more precise specification, but it is also worth remembering such a division, because in practice it can facilitate determining the tax consequences (e.g. by defining the moment of obtaining income; see below). However, for the correct assignment of income to the source, it is worth referring to the detailed list, which can be found in art. 7b sec. 1 of the CIT Act.
For companies, capital gains are part of their corporate income and taxed under Polish CIT rules. The standard CIT rate is:
- 19% for most companies
- 9% for small businesses (annual revenue < EUR 2 million)
Capital gains realized by legal entities from sale of shares, real estate, or intellectual property are included in total taxable income and taxed at the applicable CIT rate.
Participation Exemption for Dividends and Capital Gains
Certain dividend income and capital gains may be exempt under the participation exemption. Polish companies holding at least 10% in an EU/EEA-based subsidiary for two years may benefit from a dividend or capital gain exemption. The PHC regime, effective from 2023, offers a full exemption if specific conditions are met.
| Example. A taxpayer is involved in the production of construction materials. When making sales, it grants trade credits. One of the company’s contractors has financial problems and cannot settle the debt. The creditor has undertaken debt collection activities, during which negotiations were conducted and ultimately, in order to satisfy its own claims, the creditor took over (purchased) a receivable from the debtor against another entity for which the debtor provided services. The company sold the acquired receivable in order to recover the amount due as quickly as possible. Despite the fact that the receivable was acquired in the debt collection procedure, and with its help, the receivable from business activity was extinguished, the income obtained from the sale of the receivable must be included in the source of capital gain. |
Capital Gains from Polish Real Estate
Residents and Non-Residents
Capital gains from Polish real estate are taxed in Poland regardless of the seller’s tax residence. The standard 19% flat rate applies.
Exemption After 5 Years
If the property has been owned for more than five years (counted from the end of the year in which the property was purchased), the gain is exempt from tax.
Additional Rules
- Rental income is taxed separately under personal income tax rules.
- Value added tax (VAT) may apply in commercial real estate transactions.
Special Cases and Planning Considerations
Startups and Share-Based Income
Capital gains from stock options or equity-based remuneration are also taxable. Careful tax planning is required to determine whether the income is taxed as salary or capital gain.
Cryptocurrency
Since 2019, gains from cryptocurrency transactions are taxed at 19%. Losses may offset only crypto-related gains. PIT-38 is required.
Reporting & Compliance Requirements
Tax Year and Filing Deadlines
The tax year for individuals is the calendar year. For companies, the tax year of the companies can vary depending on statutory setup.
- Individuals file the PIT-38 form by April 30
- Companies must submit CIT-8 within 3 months of the end of the fiscal year
Payment of Tax
Taxpayers are responsible to pay the tax directly to the Polish tax office based on their tax return. Interest is charged on late payments.
Foreign Investors and Withholding Tax
For non-residents, withholding tax applies at source unless reduced under a tax treaty. It’s important to obtain a certificate of tax residence to benefit from reduced rates.
Double Taxation Treaties
Poland has signed numerous treaties to avoid double taxation, allowing for either tax exemption or credit method. This is especially important for non-residents earning income in Poland from dividends, interest, or real estate.
Summary: Key Facts on Capital Gains Tax in Poland
| Topic | Details |
| Capital Gains Tax Rate | 19% flat |
| Applicable To | Individuals and corporations |
| Resident Taxation | Worldwide income |
| Non-Resident Taxation | Income from Polish sources only |
| Tax on Real Estate | Exempt if sold after 5 years (from date of acquisition) |
| Annual Reporting | PIT-38 (individuals), CIT-8 (companies) |
| Filing Deadline | April 30 (individuals), 3 months after year-end (companies) |
Contact Us for Capital Gains Tax Assistance in Poland
If you’re unsure whether your capital gain is subject to Polish tax, or need help filing a tax return, our team is here office@intertax.pl to assist. We provide full support for individuals and corporations navigating income tax in Poland, helping you stay compliant with Polish tax authority regulations.