Estonian CIT under scrutiny by tax authorities

The data presented in the Ministry of Finance’s response to a parliamentary question[1] is a warning sign for entrepreneurs that the correct application of Estonian CIT rules may be more challenging than many of them had anticipated.

The information presented shows that the tax authorities’ practice of verifying lump sum settlements is extremely restrictive. In just nine months – from October 2024 to the end of June 2025 – the National Tax Administration carried out 927 preliminary audits of tax settlements, of which as many as 276 resulted in the detection of irregularities. In addition, the Ministry reported that it had conducted nearly 200 tax proceedings under various procedures provided for in the Polish Tax Ordinance.

The Ministry of Finance also confirmed that it will maintain a restrictive position on the disputed issue of signatures on financial statements when choosing Estonian CIT. All this clearly shows that in situations where the regulations do not provide a clear answer, the tax authorities do not intend to accommodate taxpayers.

Estonian CIT – between pro-investment intentions and restrictive practice

When Estonian CIT was introduced into the Polish tax system in 2021, it was presented as a pro-investment solution based on the assumption that as long as a company reinvests its profits, it does not pay income tax. Only the distribution of profits to shareholders gives rise to a tax liability. The solution has gained considerable popularity, and currently, Estonian CIT is used by over 20,000 companies, which can thus increase their financial liquidity, make additional investments, and use a simplified income tax settlement model.

Despite the pro-investment idea behind the regulations, it turns out that the attractiveness of Estonian CIT may be limited by the lack of stability resulting from the restrictive approach of the tax authorities. Data collected by the Ministry of Finance show that Estonian CIT has become one of the areas receiving special attention from the tax authorities. Let us repeat that from October 2024 to the end of June 2025, as many as 927 checks were carried out to verify the effectiveness of choosing this form of taxation, of which as many as 276 resulted in the detection of irregularities.

Control activities

The scale of control activities is also impressive. Between October 2024 and the end of June 2025 alone, 38 customs and tax audits were initiated, which led to the detection of irregularities in 20 companies. In addition, 44 tax audits were conducted—of the 31 audits completed to date, irregularities were found in as many as 25 cases. The total irregularities and losses exceeded PLN 15 million, including PLN 4.1 million in tax audits and over PLN 10.6 million in customs and tax audits. Entrepreneurs themselves, aware of the risk, submitted corrections amounting to over PLN 4.3 million.

Financial statements when choosing Estonian CIT

One of the most controversial issues is the requirement to prepare financial statements when switching to Estonian CIT during the year. The regulations stipulate that a company must close its books and prepare financial statements in order to effectively choose the lump sum. However, this raises doubts as to the form of the report, the scope of the required signatures, and the consequences of possible irregularities.

The individual interpretation of the National Tax Information Service (KIS) of December 5, 2024 gave entrepreneurs hope—it stated that the signature of the person keeping the books within the statutory deadline was sufficient, and that the signatures of the management board members could be submitted later. This was a pragmatic position that made life easier for companies. Unfortunately, interpretations issued in subsequent months confirmed that the favorable position was incidental and that the tax authorities do not intend to abandon their restrictive approach, which means that many entrepreneurs acting in good faith may fear that their choice of Estonian CIT is ineffective.

The Ministry of Finance remains adamant

In response to the parliamentary question, the Ministry of Finance unequivocally sided with the restrictive interpretation. The ministry referred to the provisions of the Accounting Act and the position of the Accounting Standards Committee, according to which a report is considered to have been prepared only when it has been signed by all required persons, including members of the management board.

What is more, the Ministry of Finance announced that the December interpretation, which is favorable to taxpayers, will be changed. At the same time, the ministry admitted that although it is not currently working on legislation to amend Article 28j(5) of the CIT Act, it is “analyzing the matter in terms of possible legislative changes”.

Practical conclusions

Estonian CIT will certainly remain a solution that is constantly gaining popularity, allowing many Polish companies to develop their business. However, taxpayers applying this solution should be particularly careful about the correctness of their settlements, especially given the current practice of the tax authorities. Signals from the Ministry of Finance confirm that contact with an advisor is particularly advisable for companies that started applying Estonian CIT during the year – the risk of questioning the effectiveness of implementation is particularly high in their case.

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[1] Parliamentary question No. 10460.