Poland’s Estonian CIT: an increasingly attractive option for domestic and foreign investors

Poland’s Estonian-style corporate income tax (CIT) regime has become an increasingly popular choice among taxpayers. Introduced in 2021 and significantly liberalised in 2022, the system has already been adopted by over 20,000 companies operating in Poland.

 

A structural shift in corporate taxation

The Estonian CIT offers a compelling alternative to the traditional concept of corporate taxation, where profits are taxed on a current basis, regardless of whether they are retained or distributed. Under the classical model, tax liability arises as soon as income is earned by the company.

In contrast, the Estonian CIT is built on a distribution-based taxation model, in which tax is payable only at the moment profits are actually distributed to shareholders. As long as profits remain within the company, no tax obligation arises. This creates significant advantages for long-term capital accumulation and investments. Importantly, the deferral of tax payment is maintained even if the company decides to opt out of the Estonian CIT model.

 

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https://www.internationaltaxreview.com/article/2ey3bf62q9gyg50a55wcg/sponsored/polands-estonian-cit-an-increasingly-attractive-option-for-domestic-and-foreign-investors