Over years of advising foreign investors entering the Polish market, we have compiled the tax questions that come up most often. Below are the answers to those with the greatest practical impact for a foreign company operating in Poland.

Does a Polish company have to pay tax on profits earned abroad?

Yes — a Polish company (Sp. z o.o., S.A., P.S.A.) is a Polish tax resident and subject to CIT on its worldwide income, regardless of where it is earned (unlimited tax liability). This means income from the sale of goods or services abroad, dividends from foreign subsidiaries and gains from the disposal of foreign assets are all subject to CIT in Poland. Double taxation is prevented by the DTTs concluded by Poland with over 80 countries.

When can I deduct VAT on purchases made before the company was registered?

As a general rule, the right to deduct input VAT arises upon registration as an active VAT taxpayer. However, if purchases were made in connection with taxable activities and the company can document their link to future taxable sales, it is possible to deduct VAT on invoices issued before registration — after registration has been completed. In practice, this means invoices for office equipment, legal services or IT hardware incurred in the pre-operational phase may be deductible after VAT registration, provided the company retains documentation evidencing their connection to taxable activities.

How is a dividend paid to a foreign shareholder taxed?

A dividend paid by a Polish company to a foreign shareholder is subject to withholding tax (WHT) at a rate of 19%. This rate may be reduced under the applicable double tax treaty (e.g. to 5% or 0% where conditions are met) or exempt under the EU Parent-Subsidiary Directive (a holding of at least 10% of shares held continuously for 2 years). Before paying a dividend exceeding PLN 2 million per year to a single entity, the “Pay & Refund” mechanism may apply, or a preferential treatment opinion may need to be obtained.

Do I need to register for VAT if I sell services exclusively to foreign clients?

It depends on the type of services and the status of the buyer. If you sell B2B services (to VAT taxpayers in other EU countries), the place of supply is generally the customer’s country — the Polish company issues an invoice without VAT (reverse charge applies to the buyer). In such cases, local VAT registration in Poland may be voluntary, but VAT-EU registration is mandatory before the first intra-EU transaction is completed — even if the company does not charge domestic VAT. If you provide B2C services (to consumers), the situation is more complex — registration under the OSS procedure or in the customers’ countries may be required.

I want to open a branch in Poland instead of a company — how will I be taxed?

A branch of a foreign entrepreneur does not create a separate legal entity, but for tax purposes is treated as a permanent establishment (PE) subject to Polish CIT on income attributable to the Polish branch. VAT obligations are analogous to those of a company. Registering a branch automatically creates a PE — the parent pays CIT in Poland on profits attributable to the branch. For full operational activities, a Sp. z o.o. (LLC) is recommended for limited liability and greater flexibility.

What is MDR and when does it apply to me?

MDR (Mandatory Disclosure Rules) is the obligation to report tax schemes, arising from implementation of the DAC6 Directive. In Poland, the obligation applies to promoters, users and facilitators who participate in arrangements meeting the criteria of a tax scheme. The MDR obligation may arise even in connection with standard activities — such as restructuring, change of legal form, or implementation of a transfer pricing model with a cross-border element. Important upcoming change: from 1 October 2026 (under a law signed by the President on 19 June 2026), the obligation to report purely domestic schemes will be abolished — only schemes with a cross-border element will remain reportable. Non-compliance carries penalties of up to PLN 2 million (and up to PLN 10 million in particularly serious cases).

⚠️ Warning: MDR may apply to your advisers too The obligation to report a tax scheme may fall not only on the company itself (as the “user”) but also on the tax adviser or law firm as “promoter” or “facilitator”. The reporting deadline is 30 days from the date the scheme is made available or implemented — after that, the penalty for non-reporting is up to PLN 2 million and is applied automatically. Even the implementation of typical business structures is worth reviewing for MDR obligations in advance.

What are the most common tax mistakes made by foreign companies in Poland?

Based on years of advisory practice, we identify the five most common errors:

  • Late VAT registration — results in loss of the right to deduct input VAT and penalties for failure to submit JPK_VAT.
  • Absence of transfer pricing documentation — particularly in respect of intra-group loans and management support services from the parent company.
  • Incorrect application of WHT — failure to withhold tax at source, or applying reduced DTT rates without verifying that the conditions are met.
  • Payments to accounts not on the White List — results in the payment not being tax-deductible and joint and several liability for the counterparty’s VAT arrears.
  • Overlooking MDR obligations — failure to report tax schemes despite the obligation arising.
💡 Our recommendation at Destrier Tax liabilities in Poland become statute-barred after 5 years from the end of the year in which the payment was due. This means errors made in the first year of operations can be challenged by tax authorities for up to 5 years — with interest accruing throughout. A tax health check conducted no later than 6 months after commencing operations allows errors to be identified and corrected before their cost compounds. Destrier Law Firm offers a tax health check covering VAT, WHT, transfer pricing, the White List and MDR.
✅ Checklist: tax health check — what to verify in your first year
✓ VAT status — are you registered and submitting JPK_VAT on time?
✓ WHT — are you withholding tax on payments to foreign entities?
✓ Transfer pricing — are transactions with related parties documented?
✓ White List — are you verifying counterparty bank accounts before payment?
✓ MDR — does any structure require reporting as a tax scheme?
Have a tax question not covered above? Write to Destrier Law Firm. We respond within 24 hours and offer a complimentary initial consultation.

Legal position: 2026 (updated: August 2026). This article is for informational purposes only and does not constitute legal advice. We recommend seeking individual legal advice before making any decisions.