The beginning of the calendar year is always a time when changes in tax regulations come into effect. The same was true in 2021. One of the changes introduced this year was an increase in the revenue threshold and the possibility for entrepreneurs whose revenue does not exceed this threshold to pay CIT at a rate of 9%.
When can the 9% rate be applied – revenue thresholds
The 9% rate can be applied by so-called small entrepreneurs who do not exceed the annual revenue limit. As of January 1, these limits have been increased. Previously, they amounted to 1.2 million Euros, and as of January 1, they amount to 2 million Euros. However, it should be noted that this concerns revenue in the tax year, not the calendar year. The amount of 2 million Euros should be converted according to the currency exchange rate announced on the first business day of the tax year, rounded to the nearest 1000 Polish zlotys. Additionally, it should not be forgotten that a company wishing to apply the 9% tax rate must also have the status of a small taxpayer. However, this rate can also be applied by new entrepreneurs in the first year of their business activity. For example, in 2021, the 9% CIT tax rate can only be applied by those entrepreneurs whose revenue limit does not exceed 9,031,000 zlotys, as well as taxpayers who do not achieve net revenues higher than 2 million Euros in the current year, converted according to the exchange rate on January 4, 2021, rounded to the nearest 1000 zlotys. Additionally, in the case of taxpayers whose tax year is different from the calendar year and started before the new calendar year but will end in the new year, and their revenues earned from the beginning of the tax year until December 31, 2020, did not exceed 2 million Euros, they can apply the 9% tax rate until the end of the month in which their revenues earned from the beginning of the tax year do not exceed this limit. However, in this situation, the exchange rate from the first day of the taxpayer’s tax year should be used for the conversion.
Who is a small taxpayer?
The most important condition that determines the possibility of paying CIT tax at a rate of 9% is, of course, having the status of a small taxpayer by the entrepreneur. At the moment, small taxpayers are all entrepreneurs whose revenues from sales, including the amount of VAT due for the year 2020, did not exceed or will not exceed the amount of 2 million Euros, which is 9,031,000 Polish zlotys, converted according to the Euro exchange rate from October 1, 2020. It is worth remembering, however, that the VAT limit for small taxpayers remains unchanged and still amounts to 1.2 million Euros. Thanks to this amendment, smaller enterprises that do not conduct their business on a very large scale will pay lower taxes. However, the new tax rate also applies to companies with shifted turnover years and to limited partnerships that are new CIT taxpayers. It should be remembered that as of 2021, limited partnerships are also subject to CIT tax under a new provision. They are now subject to double taxation, but in the case of CIT tax, they can apply this lower rate.
Circumstances excluding the application of the lower CIT rate
In addition to exceeding the revenue limit, VAT limit, or not having the status of a small taxpayer, there are several other circumstances that exclude the possibility of paying a lower CIT tax rate. Enterprises that cannot benefit from the lower rate include:
- formed through transformation, merger, or division of taxpayers, except for the transformation of one company into another company;
- formed through the transformation of sole proprietorships;
- where non-monetary contributions, also known as in-kind contributions or “aports,” were made towards the share capital, such as previously owned enterprises, organized parts of a company, or parts of a company, exceeding a total value of 10,000 Polish złoty;
- formed by entities that contributed parts of the assets acquired by these individuals or entities after the liquidation of other taxpayers, provided that these individuals held shares in the liquidated companies;