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What to know about Poland in 2023

Poland is one of Europe’s most attractive locations for overseas companies to set up a business (economic stability, a well-educated and diverse workforce, favorable location at the heart of Europe)

Economic Outlook

Economic growth is expected to decelerate to 1.6% in 2023, due to:
    • High inflation – after peaking at the beginning of 2023 at almost 19%, inflation is projected to decelerate to 4.3% towards the end of 2024
    • Monetary policy tightening
    • Negative confidence effects related to the war in Ukraine
    • Slowing demand in key trading partners

Supply-side disruptions, high input costs, and uncertainty related to the war in Ukraine can affect private investments.

The National Recovery and Resilience Plan is expected to support public investment.

Higher energy and food prices can weigh on household demand and can affect heavily poorer segments, who devote 50% of their monthly spending to food and energy.

The general government deficit is expected to increase to 5.5% of GDP in 2023 (5.2% of GDP in 2024)

poland flag on a mat in the wind and blue sky

Minimum wage growth is expected to be outstripped by inflationary pressures, leading to a decline in the real minimum wage in 2022, which will be moderated by the phased adjustment of the minimum wage in 2023 up to 3 490,00PLN from January 1st and up to 3600,00PLN (probable) from July 1st, 2023.

Poland avoids recession but may see bumpy road ahead.

Taxes in Poland

Regulatory changes introduced over the past 12 months are designed to simplify and modernize the Polish tax and corporate compliance regimes.

Poland has implemented significant reforms in its tax system and corporate compliance regime over the last few years:

  • Mandatory disclosure rules are stricter in Poland than across the EU, and cover internal transactions over a certain value as well as those that cross-borders

  • Environmental obligations in Poland follow EU regulations but are generally stricter and require specific registration and mandatory reporting to Polish authorities

  • Most official company applications and returns can now be submitted electronically, but they must be signed using a qualified certificate that meets the EU’s Electronic Identification, Authentication, and Trust Services (eIDAS) regulations

  • In 2016 Poland introduced its Standard Audit File for Tax (SAF-T) system known as JPK. This incorporated seven regulated JPK structures, of which two, JPK_VAT and JPK_FA, were relevant for VAT. The requirement for monthly submissions of JPK_VAT, was extended to all taxpayers on 1 January 2018. JPK_VAT was combined with the VAT return during 2020 and the consolidated JPK_V7M/K is submitted per the frequency of the VAT Return (monthly or quarterly). The remaining six JPK structures are submitted upon request of the tax authority in event of an audit.

Improvement in the area of digitalization for both companies and individuals – especially– some are taking time to work through the system and have increased the complexity of doing business in Poland.

All above makes it even more important for overseas companies and seek expert guidance when incorporating or doing business in Poland.

Even though changes work through the system and things are improving on an almost daily basis, but the Polish tax and regulatory environment remains still highly complex.

Tax changes 2023 in Poland:

Corporate Income Tax:

  • Minimum income tax – came into force in 2022, but have been suspended until December 31 2023, giving taxpayers another year to prepare for their application; profitability ratio increased from 1% to 2%; the formula used to calculate the tax base has been adjusted.
  • From 1 January 2023, social contributions resulting from the employment relationship in the part financed by the contribution payer, contributions to the Solidarity Fund, the Labor Fund and the Guaranteed Employee Benefits Fund will be classified as tax costs in the month for which they are required, but only if in which they will be paid within the time limit resulting from separate regulations.
  • Changes to the method of charging debt financing costs into tax-deductible costs – exclusion relates to an amount exceeding one of the two: PLN 3 million or 30% of EBITDA, yet not the sum thereof
  • Amendments to and clarification of provisions on profit shifting (costs incurred directly or indirectly to the related entity outside of Poland) – introduction of provisions on taxable base, changes to the method of establishing preferential taxation

Value Added Tax:

  • From January 1, 2023, basic VAT rates will apply again, ranging from 8 to 23% for individual products (termination of the so-called anti-inflation shields, which will expire on December 31, 2022).
  • The VAT rates will again cover, among others: fertilizers, plant protection products and energy carriers such as natural gas, electricity and system heat.
  • The exception will be the extension of the anti-inflation shield for food, which will most likely be maintained by the government. In 2023, or at least for part of it (until mid-year), the VAT rate for food products will still be 0%.
  • From January 1, 2023, new category of VAT payers will be introduced to the VAT Act – VAT Group – it means a group of entities related financially, economically and organizationally, registered as a VAT payer.
  • Electronic invoicing, along with real-time tax submission, will become compulsory in Poland from 1 January 2024.

Transfer Pricing:

The key amendment repeals the requirement to follow the arm’s length principle and the documentation obligation for indirect “tax haven” transactions:

  • PLN 500 thousand (base threshold)
  • PLN 2.5 million (for financial transactions)

Withholding Tax:

The main purpose behind amending withholding tax (WHT) provisions is to relax the rules for tax collection – commonly referred to as the pay & refund mechanism – or make it more feasible

Other changes in tax law that are worth paying attention to:

  • Simplification of the relief for “bad debts” – no attachment for declaration submission required – change from January 1, 2023;
  • Simplification of the procedure for refunding tax on income from buildings;
  • CIT exemption of income of social enterprises;
  • Changes in SLIM VAT 3 – probably change from July 1, 2023;
  • The obligation to record turnover by car washes, including self-service ones.

ALTIOS Poland monitores tax law regulations in Poland and will inform you about the tax changes related to your specicfic business activity.

More content about Poland: click here

FERRO DUO

Ferro Duo shares its story on how they plan to introduce a new product line in a different sector

The support M+V Altios gave us was exactly what any new business in a new market needs

Alexander Kehrmann
CEO
Challenge
  • Even if Ferro Duo is an established, international name, the company faced a challenge when it added a new product to their range in a sector FerroDuo had little experience with: fertilizers.
Solution
  • An Altios M+V dedicated team mapped out the opportunities for their products in the fertilizers market of four countries (Germany, Italy, France and Spain) and identified leads and opportunities by cold calling.
Result
  • Leads were identified in every markets. In Italy, some leads have already been turned into business opportunities.

You would like to know more about FerroDuo’s story and its last challenge?

Discover more about FerroDuo on: https://www.ferroduo.com

Company Profile

Founded in 2002

Headquarters: Germany

Expertise: recycling products from various industries to recreate new ones

Target countries: Italy, Germany, Spain and France

format vertical site internet success story Ferro duo

/ INNOV’IA

INNOV’IA shares its five key learnings for midsize companies to expand internationally

Working with Altios has helped us structure our international expansion journey so we will take the right step at the right time and be successful in reaching our goals.

Maria Wiltz
Global Sales & Marketing Director for Innov’ia and its subsidiaries
Challenge
  • As INNOV’IA and its subsidiaries started exploring an international expansion, they needed to determine the different key steps they have to undertake in order to structure their internationalization path.
Solution
  • An internal audit of all companies of Innov’ia was carried out to help the business prepare and optimize itself before consolidating international actions.
  • Market research was an essential first step in defining which markets could be interesting for the company to expand to.
  • ALTIOS Strategy has set up a collaborative approach with Innov’ia in order to structure their internationalization and to embark the company and its team towards a customer-centric strategy with a differentiating value proposition.
Result
  • Through their experience, they can share 5 key learnings: do your research, set realistic goals, let your customers guide you in choosing your location, get your whole team on board, don’t be too cautious, get help from local experts.

  • ALTIOS could secure and enhance their international expansion project thanks to their in-depth knowledge of the markets.

You would like to know more about Innov’ia’s story and its 5 key learnings?

Discover more about INNOV’IA on: https://www.innov-ia.com/

Company Profile

Founded in 1990

Headquarters: La Rochelle, France

7 manufacturing locations and 1 R&I Centre

350 employees

Turnover: €40 million

Expertise: Ingredient formulation and industrialization in agrifood, cosmetics or pharmaceuticals

Investment in industrial and international expansion: €70 million in 10 years

Target countries: Europe

Innovia Vertical

/ UK DIT

UK Trade Agency Partners with Altios to Grow US Exports

As Altios is already a partner of companies that are developing internationally, they know the market well and which steps to take.

Sue Marsden Gilpin
Head of Trade Services at DIT’s office in New York

Challenge

  • The U.S. is an essential market for the DIT in both inward and outward investments and exports. To reach 100,000 new exports into the U.S. by 2020, the agency needed a partner with in-country teams knowledgable on the dynamics of the American marketplace.
  • The agency selected Altios due to its expertise and knowledge in both markets, and its in-country teams.

Solution

  • To complement DIT’s services, Altios provided a range of services to aid companies in both export and expansion.
  • Services provided by Altios as part of the partnership include distribution strategy, product registration, franchising, foreign investment, administrative and accounting management, in addition to new services, as required.

Result

  • The partnership with Altios provided DIT with a flexible and open relationship on which to build its full offering of client services.

  • As the trade agency was looking for on-the-ground support, Altios teams in both the U.S. and the U.K. could provide the knowledge and expertise required by its clients.

Company Profile

Founded in 2016

1,200 employees in the U.K. and globally in more than 100 countries

Offices in the top nine cities in the U.S.

U.K.’s Department of International Trade (referred to as the DIT) is the country’s government agency that promotes inward and outward business development.

Target country: U.S.

DIT UK vertical

March 18th, 2021

The National People’s Congress (usually abbreviated NPC), is the highest organ of state power and the national legislature of the People’s Republic of China. The NPC meets in full session for roughly two week each year and votes on important pieces of legislation. NPC annual meetings provide an opportunity for the officers of state to review past policies and to present future plan to the nation.

The 13th NPC of this year is due to define the next Five Year Plan (usually abbreviated FYP) in terms of goals to achieve economically but also socially. It was held from the 5th to the 11th of March

What does this 13th NPC include ?

1) Key social/economic targets
2) About China/Hong Kong relationship
3) Foreign affairs
Business perspectives :

The economic outlook set by China at the 13th National People’s Congress is very positive with a focus on the innovation and technology sector as well as green tech. The tax breaks for foreign companies also demonstrate China’s willingness to welcome more FDI in order to boost its domestic market, one of Beijing’s priorities for the next 5 years.

Contact our Teams in China