New „Estonian” taxation in Poland from 2021

The government has recently announced that so-called Estonian tax will be implemented in Poland in 2021. Such taxation would mean that the business eligible for new form of taxation would have to pay only for the part of the income that is paid out to shareholders in the form of  dividends. The “Estonian tax” is directed at small and medium joint-stock and limited companies with their income below or even 50 million PLN. The companies that would like to use “Estonian” form of taxation would have to meet certain criteria:

  • they do not own shares in other businesses,
  • they employ at least three people excluding shareholder,
  • their passive income does not exceed their operating income,
  • they have investment costs.

The eligible taxpayers shall be able to pay “Estonian tax” for 4 years if they note 15% investment costs growth. If the taxpayer meets all the criteria after 4 years they would be eligible for another 4 year period of such taxation. The goal of the new form of taxation is to maximize investments in small and medium companies and to create new jobs in Poland. “Estonian tax” is used in Estonia, Latvia and Macedonia and is an adaption of the “pass-through company tax” that is very common in the USA.